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HMRC internal manual

Tax Credits Manual

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HM Revenue & Customs
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Payment - overpayments (A-C): Overpayments - COP 26 responsibilities

Checklist

Before you follow this guidance, make sure

  • you have identified all the reasons for the overpayment and followed the guidance in TCM0228120 to establish whether HMRC and the customer have fully met their responsibilities as set out in our ‘Code of Practice - What happens if we have paid you too much tax credit’ (COP26)
  • if you are working an overpayment case you have followed the relevant guidance listed below

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Background

The decision to recover an overpayment or not depends if HMRC and the customer have met their individual responsibilities.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) :(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Where you identify the overpayment has been created due to HMRC and / or the customer failing to meet one or more of their responsibilities, this guidance will help you to decide, if the overpayment should be

  • recovered - because HMRC has met all of its responsibilities
  • remitted - because HMRC has failed to meet one or more of its responsibilities and the customer has met all their responsibilities
  • partially-remitted - because HMRC has contributed to the overpayment by failing to meet one or more of its responsibilities or because the customer reported an HMRC error more than 30 days after it occurred.
    Example: On 10-05-2008, the customer reports that a child left the household on 25-04-2008 but we do not process the change until 01-07-2008. The customer disputes the resulting overpayment and we remit the amount of the overpayment from 09-06-2008, the day after our 30-day limit for processing the change to and including 01-07-2008. The overpayment from 25-04-2008 to 08-06-2008 remains recoverable.
    Note: The requirement for customers to tell us within 30 days about a mistake we have made on their award notice or with their payments applies to all overpayments occurring from 06-04-2008. If you are dealing with an overpayment that arose in a tax year before 2008-2009, the customer must still tell us about our mistake promptly. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

This guidance also tells you what to do if the customer says that exceptional circumstances have prevented them from meeting their responsibilities or where the customer has met their responsibilities, delayed them from telling us about a change or mistake as soon as they would otherwise have done.

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Guidance

Note: When sending customer, staff or process data to another individual or team, make sure you follow the latest data security guidelines or contact the Data Guardian or Data Security Team for advice.

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Step 1

Check household notes to confirm if the customer has met their responsibilities by reporting required changes within one month.

Note: The law says customers need to tell us about certain changes within one month of them happening or, within one month of the date when they realised a change has happened. Customers are advised to keep us up to date with all changes to reduce the amount of any overpayment which may build up. To confirm changes that need to be reported within one month, follow the guidance in TCM0224260.

If the customer did not have any changes to report, go to Step 3.

If you have decided the customer has met their responsibilities by reporting all changes within one month

  • the maximum overpayment period will be from and including the date the change took place, to and including the date HMRC correctly processed the change
  • the maximum remit period will normally be from and including the date the customer informed us of the change, to and including the date HMRC correctly processed the change
  • even though the customer has met their responsibilities by informing us about the change within the required timescale the period before the change was reported will normally be classed as recoverable
  • go to Step 2.

Note: We will only look to establish if the period from when the change happened to the day before the change was reported should not be recovered, if the customer has fully met all their responsibilities and our mistake has incorrectly increased the customer’s entitlement.

If you have decided the customer has failed their responsibilities by not reporting any changes within one month

  • the maximum overpayment period will be from and including the date the change took place, to and including the date HMRC correctly processed the change
  • the maximum remit period will be from and including the date the customer informed us of the change to and including the date HMRC correctly processed the change
  • because the customer has failed their responsibilities by informing us late about the change, the period before the change was reported will be classed as fully recoverable
  • go to Step 2.

Note: If the customer has failed to meet their responsibilities, the period from when the change happened to the day before the change was reported will always be classed as fully recoverable.

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Step 2

Confirm if HMRC have failed their responsibilities by delaying to process a change within our 30 day timescale. For how to do this, use TCM1000273.

  • check the ‘Received Date’ field in function ‘View Application’ to establish the date HMRC processed the change. For how to do this, use TCM1000273.
  • calculate the number of days between the date the customer informed us of the change and the date HMRC processed the change
  • check if HMRC failed to update the customers records but issued an award notice. For how to do this, use TCM1000441.

Note: The 30 days does not start until we have received all the necessary information needed to update the changes.

If you have identified HMRC made a mistake, go to Step 3.

If you have identified HMRC failed to update the customers records but issued an award notice, go to Step 3.

If HMRC processed the change correctly within the 30 day time limit

  • the overpayment will be fully recoverable
  • go to Step 5.

If HMRC processed the change correctly but not within the 30 day time limit

  • the overpayment would not be recoverable from the day following the end of HMRC’s 30 day time limit, up to and including the date HMRC processed the change
  • any remaining overpayment would be recoverable
  • go to Step 5.

Example: The customer notifies HMRC on 28-04-2007 that a child left the household on 08-04-2007. HMRC’s 30 day time limit for making the change ends on 27-05-2007, but HMRC does not process the change until 10-07-2007.

In this example

  • the overpayment will be a part remit for the period from and including 28-05-2007 to and including 10-07-2007
  • because HMRC have not made a mistake the overpayment for the period 08-04-2007 to 27-04-2007 would be recoverable
  • because HMRC have 30 days to process the change the period 28-04-07 to 27-05-2007 would be recoverable.

Note: The COP 26 advises customers that they should let us know as soon as possible if they do not receive an award notice within 30 days of telling us about a change of circumstances. The customer has not failed their responsibilities if they do not contact us to let us know they have not received an updated award notice.

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Step 3

Confirm if the customer has met their responsibilities by notifying us within the appropriate timescales if we have made a mistake or failed to process a change.

Note: If HMRC make a mistake or fail to process a change but the award notice issued to the customer does not contain any information that is wrong, incomplete or missing, we will treat the customer as having met their responsibilities.

  • for overpayments occurring from 06-04-2008, check if thecustomer informed us about a mistake within 30 days of receiving their award notice
  • for overpayments occurring prior to 06-04-2008, check if the customer informed us about a mistake within 60 days of receiving their award notice.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Note: To calculate the received date of the award notice you need to add four days to the issued date shown on the ‘Select Award’ screen in function ’View Award’. If the award notice was issued on 01-05-2008 the received date would be 05-05-2008. The period for informing us about the mistake would run from 01-05-2008 to 03-06-2008.

If you have established HMRC has not made any mistakes, go to Step 5.

If the customer failed to notify HMRC their award notice had wrong, incomplete or missing information within the appropriate timescale, go to Step 4.

If the customer has notified HMRC their award notice had wrong, incomplete or had missing information within the appropriate timescales

  • the overpayment is not recoverable from and including the date the customer notified us of the original change to and including the date we process the correction
  • any remaining overpayment would be recoverable
  • go to Step 5.

If you are accepting the customer met their responsibilities because the award notice did not contain any information that was wrong, incomplete or missing

  • the overpayment is not recoverable from and including the date the customer notified us of the original change to and including the date we process the correction
  • any remaining overpayment would be recoverable
  • go to Step 5.

Note: You will need to check the ‘Received Date’ field in function ‘View Application’ to establish the date HMRC processed the correction. For how to do this, use TCM1000273.

Example: The customer notifies HMRC on 08-07-2010 their working hours reduced from 36 to 28 each week from 18-06-2010. HMRC applies the change incorrectly on 30-07-2010 by reducing the working hours to 30 each week. The award notice is issued on 01-08-2010, the customer tells HMRC about the mistake on 10-08-2010. HMRC corrects the mistake on 15-08-2010.

In this example

  • the customer incorrectly continued to receive the 30 hour premium because of our mistake
  • the overpayment would not be recoverable from and including 08-07-2010 to and including 15-08-2010
  • the overpayment from 18-06-2010 to 07-07-2010 would be recoverable.

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Step 4

You have established both HMRC and the customer have failed to meet their responsibilities.

If the customer has informed us their award notice had missing, incomplete or wrong information

  • the overpayment will be a part remit from and including the date the customer informed us of the error to and including the date we processed the correction
  • any overpayment prior to the date the customer informed us will be recoverable.
  • go to Step 5.

Note: You will need to check the ‘Received Date’ field in function ‘View Application’ to establish the date HMRC processed the correction. For how to do this, use TCM1000273.

If the incomplete, wrong or missing information is or has been corrected, but has not been reported by the customer

  • the overpayment is fully recoverable
  • go to Step 5.

Note: If HMRC process the correction the same day the customer informs us, there will be no period to remit. The overpayment will be recoverable from the date the customer informed us of the change to and including the date the customer informed us of the error.

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Step 5

Confirm if HMRC have failed their responsibilities by giving incorrect advice, which has contributed to the overpayment.

If HMRC mis-advice has not contributed to the overpayment, go to Step 6.

If HMRC mis-advice has fully contributed to and is the only reason for the overpayment

  • the overpayment would not be recoverable from the date we gave the incorrect advice to and including the date we updated/corrected the award
  • go to Step 6.

If HMRC mis-advice has contributed to the overpayment but the customer has also contributed to the error

  • the overpayment resulting from the mis-advice would be classed as recoverable.
  • go to Step 6.

Example 1: The customer rings on 02-06-2010 to tell us they are no longer in receipt of Disability Living Allowance (DLA). The advisor informs the customer this will not affect their entitlement and are still eligible to claim the Severe Disability Element. The customer is contacted on 27-7-2011 following the return of their annual declaration. The customer is informed their records have been updated to remove the SDA element from 20-05-2010; the date the DLA ended, and have an overpayment from 20-05-2010 to 27-7-2011.

In this example

  • the advisor was incorrect in telling the customer they where entitled to receive the SDA element
  • the overpayment has been caused in full due to HMRC error
  • the overpayment resulting from the incorrect inclusion of the SDA element from 02-06-2010 to 27-07-2011 would not be recoverable.

Example 2: The customer rang us on 02-06-2010 to tell us they were no longer receiving DLA. The advisor incorrectly tells the customer this will not affect their entitlement and fails to update the system. The customer rings us on 10-09-2010 to tell us their income has reduced. During this conversation, the advisor tells the customer they should not have been receiving the SDA element. When asked when their DLA ended the customer says they will need to check and ring us back. The customer does not ring back with the necessary information until 30-09-2010.

In this example

  • HMRCs mis-advice means the overpayment is not recoverable from 02-06-2010 to and including 10-09-2010.
  • The customer has contributed to the overpayment from 11-09-2010 to and including 30-09-2010 making the overpayment recoverable.

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Step 6

Establish for each period you have identified as recoverable, if there were any exceptional circumstances that

  • prevented the customer from meeting their responsibilities
  • where the customer has met their responsibilities, delayed them from telling us about a change or mistake as soon as they would otherwise have done.
    Example: The death of a close relative, serious illness or flooding of the customer’s home delayed them from telling us about a change of circumstances or a mistake we have made.
    Note: Exceptional circumstances do not have to be rare. An acceptable alternative meaning of exceptional circumstances is strong reasons.
    Note: Only periods where the decision should be to fully or partially recover the overpayment need to be considered for exceptional circumstances. This includes the period prior to the customer reporting the change, which is normally classed as recoverable

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

If there are no exceptional circumstances which prevented or delayed the customer from meeting their responsibilities, go to Step 9.

If there are no exceptional circumstances which prevented or delayed the customer from meeting their responsibilities but they have told us that they have mental health problems that prevent them from dealing with their financial affairs, or recovery of their overpayment would be detrimental to their health, go to Step 8

If there are exceptional circumstances which prevented or delayed the customer from meeting their responsibilities, go to Step 7.

If there are exceptional circumstances , for example mental health issues which prevent the customer from dealing with their financial affairs, or recovery of the overpayment would be detrimental to their health, go to Step 8.

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Step 7

Make a note of the exceptional circumstances the customer indicates prevented or delayed them from meeting their responsibilities (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • ensure the following parts of the ‘Overpayments and exceptional circumstances worksheet’ are completed
    • caseworker’s name and contact details
    • details of exceptional circumstances
    • all reasons for the overpayment
    • decisions on what periods are classed as currently recoverable due to HMRC and the customer failing to meet their responsibilities
    • any (or all) relevant dates.
  • discuss the exceptional circumstances with your Higher Officer (HO) who will consider the circumstances and decide whether any outstanding overpayment should be recovered in full or in part.

If your HO does not accept the exceptional circumstances, and HMRC have not made a mistake, go to Step 11.

If your HO does not accept the exceptional circumstances, and HMRC have made a mistake, go to Step 10.

If your HO accepts the exceptional circumstances in full or in part, go to Step 9.

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Step 8

Make a note of the exceptional circumstances the customer indicates prevented or delayed them from meeting their responsibilities (This content has been withheld because of exemptions in the Freedom of Information Act 2000) . Ensure the following parts of the ‘Overpayments and exceptional circumstances worksheet’ are completed

  • caseworker’s name and contact details
  • details of the health issues
  • all reasons for the overpayment
  • decisions on what periods are currently recoverable due to HMRC and the customer failing to meet their responsibilities
  • any (or all) dates.
     
  • discuss the exceptional circumstances with your Higher Officer (HO) who will consider the circumstances and decide whether any outstanding overpayment should be recovered in full or in part.

If your HO has accepted that the customer has mental health issues that prevent them from managing their financial affairs, or recovery of the overpayment would be detrimental to their health, go to Step 9.

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Step 9

From the information you have obtained make a decision on whether the overpayment is recoverable, not recoverable or partially recoverable.

If there are no exceptional circumstances and HMRC have not made a mistake, go to Step 11.

If there are no exceptional circumstances and HMRC have made a mistake, go to Step 10.

If your HO has accepted exceptional circumstances contributed to the overpayment in full

  • the full period indicated by your HO will not be recoverable
  • any remaining period will be classed as recoverable
  • return to the guidance in TCM0224040, TCM0224120 or the Overpayment-related SOP at the point where you left it to remit the overpayment
  • take no further action.

If your HO has accepted exceptional circumstances contributed to the overpayment in part only and HMRC have not made a mistake

  • the period indicated by your HO will not be recoverable
  • go to Step 11.

If your HO has accepted exceptional circumstances contributed to the overpayment in part only and HMRC have made a mistake

  • the period indicated by your HO will not be recoverable
  • go to Step 10.

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Step 10

Confirm if the overpayment resulting from HMRC’s mistake incorrectly increased entitlement.

  • make a note of the entitlement of WTC and CTC on the incorrect award version issued to the customer
  • make a note of entitlement to WTC and CTC on the award version immediately prior to the incorrect version

If HMRC made a mistake but the customer failed to tell us or told us late, go to Step 11.

If HMRC’s mistake did not increase entitlement or entitlement stayed the same and the customer met all their responsibilities

  • the overpayment will normally be a full remit from the date the customer informed us of the change to the date we correctly processed the change.
  • go to Step 11.

If HMRC’s mistake increased entitlement and the customer met all their responsibilities

  • the entitlement increase of WTC and CTC for the period from the effective date of change to the day before the change was notified can be remitted.
  • the overpayment will normally be a full remit from the date the customer informed us of the change to the date we correctly processed the change.
  • go to Step 11.

Example: The customer notifies HMRC their childcare costs reduced from £40.00 to £20.00 each week on 08-04-2008. HMRC applies the change incorrectly on 20-04-2008 by increasing childcare to £60.00 each week from 31-03-2008. This results in the customer receiving an increase in childcare charges in error. The award notice is issued on 21-04-2008 and the customer tells HMRC about the mistake on 10-05-2008. HMRC corrects the mistake on 15-05-2008.

The childcare charges should have reduced to £20.00 each week with an effective date of 28-4-2008. The customer met their responsibilities by reporting the change within one month. HMRC failed their responsibilities by incorrectly updating the customers records. The customer met their responsibilities by telling us on 10 May 2008 we had made a mistake.

In this example

  • the overpayment period from 31-03-2008 to and including 15-05-2008 is not recoverable
    • The customer was already receiving entitlement based on her paying £40.00 per week child care
    • The increase of WTC entitlement due to the incorrect increase of child care charges from £40.00 to £60.00 will not be recoverable

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Step 11

Confirm all the periods which should be remitted and, or recovered due to HMRC or the customer failing to meet their responsibilities.

Note: You can have more than one period or reason that may be remitted or recovered if HMRC and the customer have failed their responsibilities.

If HMRC have failed one or more of their responsibilities and the customer has met all responsibilities

  • the overpayment will not be recoverable for each period HMRC has failed to meet their responsibilities
  • any further periods your HO has identified under exceptional circumstances will not be recoverable
  • a part remit may be applicable if you identified any increase in entitlement at Step 10
  • return to the guidance in TCM0224040, TCM0224120 or the Overpayment-related SOP at the point where you left it to remit the overpayment
  • take no further action.

If HMRC have met all their responsibilities and the customer has failed to meet one or more of their responsibilities

  • the overpayment will normally be fully recoverable
  • any periods your HO has accepted under exceptional circumstances will not be recoverable
  • return to the guidance in TCM0224040, TCM0224120 or the Overpayment-related SOP at the point where you left it to reinstate recovery of the overpayment
  • take no further action.

If both HMRC and the customer have failed one or more of their responsibilities

  • the overpayment will normally be a part remit
  • the overpayment will be fully recoverable if the customer did not inform us of the mistake or the mistake was corrected the same day the customer informed us
  • any further periods your HO has accepted under exceptional circumstances will not be recoverable
  • a part remit may be applicable if you identified any increase in entitlement at Step 10
  • return to the guidance in TCM0224040, TCM0224120 or the Overpayment-related SOP at the point where you left it to remit the overpayment
  • take no further action.

If both HMRC and the customer have met all their responsibilities

  • the overpayment will normally be fully recoverable
  • any periods your HO has accepted under exceptional circumstances will not be recoverable
  • return to the guidance in TCM0224040, TCM0224120 or the Overpayment-related SOP at the point where you left it, to reinstate the recovery of the overpayment
  • take no further action.