The government has introduced a “streamlined procedure” for
deciding whether overpayments should be recovered, in order to
clear the current backlog of disputed overpayment cases.
Getting Revenue and Customs (HMRC) to accept that official error
exists at all was a significant step forward; and their next
defence was to say that, even if official error was shown, the
claimant should have “reasonably known” that they were being
overpaid. In other words, claimants had to have a better grasp of
tax credit law than the people applying it! If, for example,
someone got tax credits of £2,000 a year but then notified
HMRC that their pay had gone up by £50 a week, they should
have reasonably known that their tax credits should have gone down
even if HMRC didn’t act on the information supplied to them.
The new overpayments procedure is to be applied to cases which
HMRC find, after applying certain risk assessment tests, to be “low
risk”. It involves a brief investigation of how the overpayment
arose and a shortened calculation of the amount that should be
written off. What we don’t know as yet is how cases will be classed
as “low risk”.
Claimants then have the choice of accepting the amount offered,
or asking for a full calculation. As a full calculation and
investigation might show that there was no official error after all
or the actual official error was less than that arrived at by the
shortened calculation, it should usually be in the claimant’s
interests to accept the shortened calculation.
The streamlined procedure is being used to decide outstanding
disputes from 2003-4 and 2004-5. It will continue to operate until
the backlog is cleared. But cases that have already been decided on
the normal basis will not be reopened, which could be unfair on the
many claimants who are already repaying contentious
New cases which do not meet the “low risk” criteria are being
decided on the same normal basis that applied before the
streamlined procedure was introduced, that is they will be
subjected to a full examination. Claimants in this category will
have one of three decisions applied to them and will be told:
- The overpayment arose from official error which the claimant
cannot reasonably be expected to have spotted and the whole
overpayment will be written off; or
- The claimant should reasonably have known that their awards
were wrong and the full overpayment will be recovered; or
- Only part of the overpayment arose from official error and that
part only will be written off.
As said, claimants who had already challenged their overpayments
and received an adverse decision cannot ask for their case to be
re-examined. So the decision as to whether an overpayment is
recovered is governed more by the date on which it is challenged
than by the facts of the case.
None of the above prevents the claimant exercising their right
to use the disputes and complaints procedures that HMRC has
established. First, claimants can contact the Overpayments Disputes
Team, TCO, Preston PR1 0SB. It’s also worth checking the Code of
Guidance on Overpayments on www.hmrc.gov.uk. Complaints can
be directed to the director’s complaints team on 0151 966 1151.
Gary Vaux is head of money advice, Hertfordshire
Council. He is unable to answer queries by post or telephone. If
you have a question to be answered please write to him c/o