CCM15805 - Undisclosed Partners: Recovery of Overpayments from 18 January 2010 - Failure to notify a change in a previous year - Example with a penalty

Example 1

Jay has claimed tax credits as a single father since 2004. On 18 February 2010, following a 2008/2009 enquiry Jay admits he has been living with Meg. Meg was originally his lodger but he knew he did not have to declare the rent as it was covered by the rent a room scheme. Jay says he did not think it made any difference once they became a couple as there was no more money coming into the household. Although you agree the change in the relationship was a gradual one you conclude that by 6 April 2008 Jay and Meg were living as a couple.

Jay accepts he has made incorrect claims and you decide to charge a penalty. Jay and Meg make a new joint claim for 2009/2010 and this is backdated to 27 November 2009. Jay has two overpayments as follows:

  • 2008/2009 (6 April 2008 to 5 April 2009) £5,130
  • 2009/2010 (6 April 2009 to 18 February 2010) £4,500

Jay and Meg have made a new claim so you need to calculate notional entitlement for two periods. Had they made correct claims they would have received:

  • 2008/2009 (6 April 2008 to 5 April 2009) £1,645
  • 2009/2010 (6 April 2009 to 26 November 2009) £1,240

The notional entitlement for 2008/2009 is £1645 and for 2009/2010 it is £1,240. We will recover £3,485 for 2008/2009 and £3,260 for 2009/2010 from Jay. The 2008/2009 penalty will be based on a net over-claim of £3,485.

Example 2

Becky claimed tax credits in 2006 as a single mother. On 1 March 2010, following a 2008/2009 enquiry, Becky admitted Tom has been living with her since 1 September 2008. Becky did not tell us when Tom joined her household because she didn’t expect the relationship to last long. Much to her surprise it is still going well.

Becky accepts she has made incorrect claims and you decide to charge a penalty. Becky and Tom make a new joint claim for 2009/2010 and this is backdated to 7 December 2009. Becky has two overpayments as follows:

  • 2008/2009 (1 September 2008 to 5 April 2009) £4,055
  • 2009/2010 (6 April 2009 to 1 March 2010) £6,400

Becky and Tom have made a new claim so you need to calculate notional entitlement for two periods. Had they made correct claims they would have received:

  • 2008/2009 (1 September 2008 to 5 April 2009) £1,802
  • 2009/2010 (6 April 2009 to 6 December 2009) £2,060

The notional entitlement for 2008/2009 is £1,802 and for 2009/2010 it is £2,060. We will recover £2,253 for 2008/2009 and £4,340 for 2009/2010 from Becky. The 2008/2009 penalty will be based on a net over-claim of £2,253. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)