Child Tax Credit Overpayment

speedyturtle

Hello everyone.

I was wondering if anyone can give us any advice on child tax credit overpayment.

I am from Pakistan and my wife is British. My case was in the home office for around 2 years and got my residence permit in June 2011. I applied for national insurance number and got it 31 October 2011.

My wife and I got married in 2005 but due to me not having any paper work and due to problem with money we did not apply for my immigration papers till 2007. Because of all that my wife was receiving tax credit under single person.

As my immigration papers went in the home office. My wife told tax credit on 30th march 2007 that she was wanted to change her single claim to joint claim but the problem was that they were asking for my national insurance number which i didn't had. In the end wife spoke to some kind of manager at tax credit office over the phone who advised that the only way to get tax credit is for her to claim as a single parent.

As she was advised by someone at the tax credit office, my wife again made a claim under single parent so she can start receiving the money as the money was stopped on the joint claim as we could not provide tax credit with my NI number.

On 31 October I received my NI number. As my wife was and still suffering from depression and other health problems we decided that all the benefits would change under my name. As we thought the tax credit kind of knew that i was living over here, we left the tax credits till last and changed the income support and housing benefits under my name first. We also knew that we could have claimed more under a joint claim but that would have meant everything stopped at once and we would have no money to live on hence we thought that we would take less money rather than no money.

In may 2013 we received a letter from tax credit telling us that we have been Over paid from 31 October 2011 to January 2012. This was the period from which i got my NI number till the date we applied for the tax credit under joint claim.

We appealed against the decision which was turned down. We than tried to involve our MP who wrote the letter to tax credit and received the reply today saying that the overpayment is still due. Our MP asked them to apply the "NOTIONAL ENTITLEMENT" which was turned down as well.

It seems that the advice the wife was given about claiming as a single parent was under the table and the tax credit has totally denied any kind of advice given to my wife. However she must repay the overpayment of £2271.87, which occurred due to delay in her reporting her correct circumstances after 31 October 2011.
"In certain circumstances, we can apply 'Notional entitlement' where a customer has made a claim in the wrong capacity. However Mrs *****'s overpayment does not meet the criteria for Notional entitlement. Therefore, we are right to ask her to repay the overment."

From what i read over the Internet i thought Notional entitlement was applied as long as you have not gained from the situation, In our case we did not gain anything from claiming as a single person but actually lost money as we would be entitled to more under a joint claim.

I was wondering if anyone can help us and give us some advice. I do apologize for the long post and would be grateful if anyone can help us.

Thanks.

Jobseeeker

Ask them exactly what the criteria is for notional offsetting.

"we left the tax credits till last and changed the income support and housing benefits under my name first"

Do you mean that your wife claiming housing benefit and income support as a single parent? I would be more worried about that as it could be treated as fraud rather than overpayment

speedyturtle

Jobseeeker wrote: »

Ask them exactly what the criteria is for notional offsetting.

"we left the tax credits till last and changed the income support and housing benefits under my name first"

Do you mean that your wife claiming housing benefit and income support as a single parent? I would be more worried about that as it could be treated as fraud rather than overpayment

It would be treated as fraud if we didnt tell them. If i had NI number than it would have been different and could have been taken as a fraud but when the home office knows that i am living here and they take over 3 years to make a decision and in the mean time i cannot work or apply for anything than it would not be taken as a fraud.

speedyturtle

I have searched over the internet and i have found some more information.



Notional Offsetting

Sometimes, tax credit claimants who form a couple or who become single, either because they separate or because one partner dies, are slow in reporting the change to HMRC or have been mistaken about the need to report such a change. Yet in many cases, if they had acted promptly they would have continued to be entitled to tax credits, albeit in a different capacity.

Until 18 January 2010, HMRC would recover the whole of any overpayment arising on the old claim, but give no credit for what the claimant would have received had they made a new claim at the right time.

From 18 January 2010, HMRC introduced a new policy whereby tax credits recipients who start to live together, or who become single after being part of a couple, but are late reporting the change to HMRC, can reduce the overpayment on their old claim by whatever they would have been entitled to had they made a new claim promptly.

This new policy applies to overpayments arising from 18 January 2010, but also to overpayments that were still outstanding as of that date. So, if an overpayment has been repaid in full prior to 18 January 2010, the new policy will not apply. However, if any part of it remains unpaid, offsetting can be applied to it.

To request notional offsetting, claimants should contact the tax credit helpline to ask for their case to be referred to the ‘notional offsetting (or notional entitlement)’ team in the Tax Credit Office. If no action is taken, a letter should be sent to CSSG, Tax Credit Office, Preston, PR1 4AT.

Note that the notional offsetting will not cover the one month (previously three months) by which the claimant will be able to backdate their new claim. Normally HMRC will grant the one month backdating automatically, but if that doesn’t happen, the claimant will need to ask for it.

On the whole HMRC policy is to be lenient and not charge a penalty where the failure to report has resulted from a mistake or misunderstanding. If HMRC think the claimant has been negligent in not reporting, and there is a net overpayment even after notional offsetting has been applied, the claimant may be charged a penalty against which there is a right of appeal.

If the failure to report is dishonest (considered by HMRC to be deliberate error), the penalty may well be substantial and in such cases notional offsetting will not be given. A list of what constitutes deliberate error is available in the HMRC compliance manual (CCM10750). The CCM also contains some examples of deliberate error (CCM10755). It is important that advisers challenge any cases where HMRC have classified the case as deliberate error on the basis that they have retrospectively decided, using credit reference data, that the claimant should have made a couple rather than single claim. Unless there is clear evidence that the claimant acted deliberately, then advisers should challenge the decision not to apply notional offsetting particularly if no penalty has been charged.

More information about notional offsetting can be found in the HMRC compliance manual. The manual covers three distinct periods, prior to 17 May 2007, between 17 May 2007 and 18 January 2010 and after 18 January 2010. This is because notional offsetting applied until May 2007 when it was withdrawn. It was reinstated in January 2010 following representations from LITRG and other organisations.

You can find information about couples and repayment of overpayments in our dealing with debt section.

http://www.revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/understanding-living-together/#Notional Offsetting

speedyturtle

Just went on Child Poverty Action Group website in the section of Tax credits: offsetting overpayments.

http://www.cpag.org.uk/content/tax-credits-offsetting-overpayments

Example 2

Sophie is working part time and claiming CTC and working tax credit (WTC). On 12 October 2009 she is joined by her partner Charles who is an asylum seeker not entitled to work in the UK. Sophie does not notify the Revenue because it does not affect the amount of tax credits she is entitled to. She is therefore overpaid from 12 October 2009. Following advice from a CAB she notifies the change on 12 April 2010 and makes a new claim jointly with Charles which is backdated to 12 January and wipes out the overpayment from that date. Under the new policy, the outstanding overpayment from 12 October to 12 January is offset against the amount Sophie and Charles would have been entitled to as a couple from 12 October. As this is the same amount she received as a lone parent, she does not have to repay an overpayment.

The only difference between this example and our circumstances is that he was an asylum seeker and i am married to a British woman. GRRRRRR

laineybird2000

Your post reads like you obtained you NI number in Oct 11 but didn't report it until Jan 12, that's your overpayment. Unless I'm missing something?