CBM130100 - Overpayments: general information
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Overpayments – general
General considerations
Overpayment causes
Types of overpayments
Having identified an overpayment
Offsetting an overpayment
Considering recoverability
{#Overpaymentsgeneral}Overpayments – general
The term “overpayment” relates to any amount paid in excess of the award authorised by the statutory authorities.
An overpayment is determined by the statutory authorities by revision, supersession or appeal for further information use CBM110300 . For appeals guidance is on hold awaiting judicial review.
{#Generalconsiderations}General considerations
{#Overpaymentcauses}Overpayment causes
There are three main causes of an overpayment.
| Table re overpayment causes | Misrepresentation\nFor information about misrepresentation, use CBTM05000part3 | Misrepresentation arises when a claim is made and\n- details are withheld\n- it is inaccurate. |
|---|---|---|
| Failure to disclose\nFor information about failure to disclose, use CBTM05000part4 | A failure to disclose arises when a change of circumstance occurs and\n- the change is not reported at the appropriate time\n- the change is reported but details are withheld\n- the change reported is inaccurate. | |
| Official Error | An official error is an overpayment caused due an error by an Officer of HMRC and which no person outside HMRC caused or contributed to.\nIf an overpayment is caused by an official error there is no question of recovery.\nNote: While an official error is non-recoverable. The full amount overpaid is not always an official error. See example 2. |
Note: It does not matter whether the misrepresentation or failure to disclose is fraudulent or wholly innocent.
{#Typeofoverpayment}Types of overpayment
| Table re types of overpayment | Recoverable | The customer\n- has received payment beyond the circumstance that would determine a reduction or an end to the award\n- has misrepresented or failed to disclose a material fact in their circumstance\n- has failed to identify the circumstances determining a reduction or an end to the award before a further crediting of payment \n \n Note: A ‘System Caused’ overpayment is where notification is received and it is too late to recall the credit. Where the change of circumstance is received on the day of crediting or after 12 noon on the day before crediting then the payment is recoverable. Further payment following the System Caused overpayment will result in the System Caused and following payment being treated as non-recoverable.\n- is required to repay. |
|---|---|---|
| Non-recoverable | The customer\n- has received payment beyond the circumstance that would determine a reduction or an end to the award\n- could not be reasonably expected to know the change would affect their entitlement to the benefit\n- had identified the circumstances determining a reduction or an end to the award before a further crediting of payment \n \n Note: A due payment crediting into a bank account was identified but failed to be recalled is a non-recoverable overpayment. A payment can be recalled up to 12 noon of the previous day due a credit.\n- is not required to repay. | |
| Part recoverable / part non-recoverable | The customer\n- has received payment beyond the circumstance that would determine a reduction or an end to the award\n- has misrepresented or failed to disclose a material fact in their circumstance\n- circumstances are identified but HMRC failed to prevent a further crediting of payment\n- is required to repay the recoverable part of the overpayment but not the non recoverable part. |
{#Havingidentifiedanoverpayment}Having identified an overpayment
When a customer has been overpaid, make enquiries to gather any relevant information that may be missing.
Note: It is possible to have all of the relevant facts without having to contact the customer. Supporting evidence can be found in historical entries held in HMRC IT systems such as details of change and notes recorded around the time an overpayment occurred.
Note: Should an overpayment be incurred and a payment has been retained by an officer of a Local Authority or by a representative of a Voluntary Organisation then refer the papers to the Local Authority Team.
With all lines of enquiry exhausted a considerative decision is to be made based on all the facts of the case, determining if and how much of the overpayment is recoverable.
{#Offsettinganoverpayment}Offsetting an overpayment
Where a customer has been overpaid Child Benefit and there are arrears due, providing a decision has not been made on recoverability of the overpayment under s.71AA or S69 NI AA, the Child Benefit overpayment can be offset against any arrears due. Follow the guidance in CBM130150.
When calculating an overpayment an offset must always be considered first and only the amount remaining (if any) following that offset will fall for consideration of recoverability. For any remaining overpayment follow the guidance in CBM130200.
Where payment has been suspended whilst determining entitlement and it is later determined that entitlement exists and arrears are due, we cannot use those arrears to either recover an overpayment or offset them against part of the overpayment. An offset can only be considered when you are raising an overpayment and arrears are due at the same time. If the overpayment decision has already been made you cannot take offset action. In these cases, follow the guidance at chb80115.
{#Consideringrecoverability}Considering recoverability
Base your decision on the available facts. When there is a lack of evidence or no evidence to support a customer’s statement then consider all relevant circumstances before making a decision on recoverability. Evidence should only be rejected when it is self-contradictory or inherently improbable.
{#Example1}Example 1
A customer contacts the department to discuss the circumstance that caused them to be overpaid. In this example the customer changes their story as the original version of events does not support their argument. The facts to consider are:
- the customer states they reported the change to the Child Benefit Office in a letter
- the customer states in a later conversation that they had telephoned to report the change
- there is no evidence of either disclosure.
It can be decided that the two statements are self-contradictory and as there is no evidence to support either disclosure, on a balance of probabilities, no disclosure of the material fact took place.
{#Example2}Example 2
A change of circumstance ending a customer’s entitlement was reported at the time of change to the Child Benefit Office. Action taken to apply the change to the system failed due to an error. A letter confirming the end of entitlement was issued and payment to the customer continued. The customer went on to receive payment for several years without reporting it before the overpayment was identified. The facts to consider are:
- entitlement ended
- the customer did not misrepresent or fail to disclose material facts at the time of change.
The decision maker can decide the overpayment is a result of an official error and therefore non-recoverable. However, there are additional circumstances to consider and they are:
- the customer continued to receive on-going payment
- a letter was sent to the customer confirming the end of entitlement at the time of change.
In this example, a decision can be applied whereby the customer failed the duty to disclose that payments had not stopped while knowing entitlement ended. The decision maker must consider what is reasonable to expect of the customer. Further considerations are:
-
the customer has not reported continuing payment
Note: Where the evidence shows a customer reported payment continued to credit their account and the Child Benefit Office failed to stop further payment, it is reasonable to treat the remaining overpayment as non-recoverable.
-
the customer may have expected a final payment though unaware of how much they were entitled to receive.
Note: Where the evidence suggests final payment was due, it is reasonable to treat the initial payment(s) after the decision letter is sent to the customer as non-recoverable.
The resulting overpayment is part non-recoverable and part recoverable.
{#Example3}Example 3
The same child is included in two live accounts. This can happen where a customer has two live accounts or where both customers have claimed for the same child. The circumstances to consider are:
- the customer or customers have failed to disclose a material fact that any person with reason diligence would have been aware (namely, two people cannot receive Child Benefit for the same child or one person cannot receive Child Benefit twice for the same child)
- in a scenario where someone else is in receipt of Child Benefit for the same child it can include a duty to disclose. It could be proven on the balance of probabilities that the claimants might reasonably be expected to know of each other’s awards (for example, if they were receiving payment into a joint bank account or they lived in the same household as husband and wife).
The resulting overpayments could be made recoverable from the customer.