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Tax Credit case summary 2
Mr and Mrs B were overpaid tax credit by about £3,700 in the 2004/05 tax year and about £1,400 in the 2005/06 tax year. The overpayment in the 2004/05 tax year arose because of two reasons –
- In August 2004, the TCO made a mistake when they amended Mr and Mrs B’s award. Mrs B had contacted them to say that she was now receiving Contribution Based Job Seekers Allowance (JSA (CB)) but unfortunately, the TCO incorrectly recorded Mrs B as receiving Income Based Job Seeker’s Allowance (JSA (IB)) instead. When a Claimant’s household is receiving JSA (IB), it automatically entitles them to the maximum amount of tax credits, as the TCO do not consider their income when calculating their award. This meant that Mr and Mrs B began to receive a much higher amount of tax credits than they were entitled to.
- Mr B’s employer continued to pay him Working Tax Credit (WTC) after the date the TCO had asked them to stop these payments. The overpayment in the 2005/06 tax year arose because Mr and Mrs B’s actual household income during that year was higher than the income that they had declared earlier in the year.
When Mr and Mrs B disputed their overpayments, the TCO told them that they accepted that the majority of the 2004/05 overpayment had arisen from their mistake but they felt that this mistake would have been apparent from the award notice sent to Mr and Mrs B in August 2004, which would have made it clear that the award was incorrectly based on Mrs B receiving JSA (IB). They, therefore, felt that it was not reasonable for Mr and Mrs B to have believed their award was correct. Mr and Mrs B complained to us that they could not have known that their award was incorrect, as they had little knowledge of the benefit system and they did not know that JSA (IB) and JSA (CB) were two separate benefits.
We partially upheld this complaint. We were satisfied that the only part of the overpayment that had arisen due to a mistake on the part of the TCO resulted from the amendment they made to the award in August 2004 to show incorrectly that Mrs B was receiving JSA (IB). We accepted that Mr and Mrs B may not have known the exact difference between JSA (IB) and JSA (CB) and also may not have known that, because Mrs B was shown as receiving JSA (IB) on the award, this would result in a higher entitlement to tax credits. However, we considered that Mrs B was aware of the type of JSA she was receiving, as she correctly advised the TCO that she was receiving JSA (CB). We also felt that it would have been clear that the type of JSA detailed on the subsequent award notice was different to the details Mrs B had previously given. We felt that it would have been reasonable to expect Mr and Mrs B contact the TCO to query this. In our view, it would have been clear from the award notice Mr and Mrs B received in August 2004 that their award was based on incorrect information. The benefit described on the award notice was not the benefit that Mrs B was receiving. Therefore, we could not conclude that it was reasonable for Mr and Mrs B to believe that their tax credit payments were correct. Consequently, the conditions for writing off an overpayment, as set out in COP 26, had not been met and we did not ask the TCO to write off any part of the overpayment. However, we did agree with the TCO that it was appropriate to pay Mr and Mrs B a further £175 in compensation, in recognition of the mistakes made and the way their complaint had been handled.
