Overpaid housing benefit, council tax and BR

lilybankrupt

I am probably going to declare BR in April / May.

I'm self employed and currently in receipt of housing benefit. I think, when I finish my accounts for the year in April and share them with the council, I will have been overpaid housing benefit for 2013-14. If so, will this overpayment fall into the BR?

I think working tax credits will be OK, but if there is an overpayment of these will this also fall into BR? What happens if there has been an underpayment?

Also, I'm sure I read somewhere that due to a recent court ruling, the full council tax for the year of BR gets included in BR even if you are paying by monthly instalments. So if I go BR in say May, will my council tax for 2014-15 be included in the BR? It's not that I'm trying to get out of paying if it's due, it's more I need to take it into account for my SOA.

National_Debtline

Hello there,

The recent court ruling is commonly referred to as 'Nortel', here's a link to the case: http://www.bailii.org/uk/cases/UKSC/2013/52.html

Here is the important part:

When a debtor is discharged from bankruptcy (or Sequestration in Scotland) then any non-fraud debts, where the end date of the overpayment is before the date of the bankruptcy or sequestration order, must be written off. This must take effect immediately.

The previous view was that 'a benefit overpayment (including housing benefit or council tax benefit) does not become a fixed liability until such time as the decision maker has made a determination that the overpayment, or part of it, is recoverable under social security legislation' - as per R (on the application of Steele) v Secretary of State for Work and Pensions.

Hope this makes sense, if you need any further help just let me know.

Best wishes,

David @ NDL.

Red_dog_Sam

You can , of course , check with your local authority but in terms of council tax the full year is covered if , at the time of the bankrupty, the right to instalments is already lost. So with council tax you might get 7 days to pay up on a reminder but then 7 days after that, if you haven't paid it, you lose the right to instalments and the whole years charge becomes immediately due. This is usually followed by a final notice or summons. If that is the position at the date of bankruptcy , the whole years charge does fall under the bankrupty order because it is all owed at the time. If payments have been made and the instalment scheme is still in place, it would only be any difference between what had been paid and the charge as apportioned up to the date of the order.

CIS

I think the OP is referring to this case - https://forums.moneysavingexpert.com/discussion/4875814 - which reverses the previous opinion on when the council tax debt is due.

The judge has made the opinion that council tax is due in full at the start of the year (which is correct) and therefore any concession to pay in installments does not remove this fact. As its due in full from the start of the year he ruled it was a debt for the year that could be claimed in full before any reminders had even been issued.

lilybankrupt

CIS wrote: »

I think the OP is referring to this case - https://forums.moneysavingexpert.com/discussion/4875814 - which reverses the previous opinion on when the council tax debt is due.

The judge has made the opinion that council tax is due in full at the start of the year (which is correct) and therefore any concession to pay in installments does not remove this fact. As its due in full from the start of the year he ruled it was a debt for the year that could be claimed in full before any reminders had even been issued.

Thanks, that was the ruling I was thinking of.

So, it sounds like any housing benefit overpayment plus next year's council tax will be included in the BR?

sort_me_own_yard_out

If this is the case then surely you couldn't put the cost of council tax down on your SOA as it is an expense you don't have.

lilybankrupt

sort_me_own_yard_out wrote: »

If this is the case then surely you couldn't put the cost of council tax down on your SOA as it is an expense you don't have.

Yes I think that would be true, it's one of the main reasons I asked.

I guess if it's included in the BR then it's not on the SOA, if it's not included in BR it is part of the SOA.

It's somewhat academic for now in that my income at present means I would be nowhere near an IPA anyway, but things will change over the year and so I need to bear it in mind.

The other reason it's relevant is that my council are changing their council tax benefit rules this coming year for self employed peeps and may work on the assumption that a self employed person earns minimum wage equivalent even if their income is below this, which in turn means I may not get council tax benefit at the same level as at present.

SomebodyToldMe

I was told by CAB that my tax credit overpayment has be included in BR, as well as my rent arrears and council tax arrears.
Hope this helps