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HMRC internal manual

Tax Credits Manual

Payment - overpayments (F-P): Overpayments - Individual Voluntary Arrangement reported

Background

An Individual Voluntary Arrangement (IVA) is set up by a customer in order to pay a proportion of their debts. The IVA is usually set up when the customer’s debt is too large for them to pay back their creditors at the required rate. The customer makes an amount of money available and the creditors bid for a portion of it.

The Voluntary Arrangement Service (VAS) deals with IVAs. The VAS spreadsheet (VAS 37/2) provides details of all the IVAs that have an outstanding tax credits award and is updated on a weekly basis. This is held in a secure shared folder. There is also an Insolvency Register.

VAS will also include on a spreadsheet any failed and terminated IVAs. When a customer fails to keep up payments under the terms of their IVA you may need to reinstate normal recovery of their tax credits overpayment. VAS will instruct you when you need to do this.

If the customer is a member of a joint household then, if only one customer has entered into an IVA , the tax credits overpayment will continue to be recovered from the other customer. This is because both members of the household are jointly and severally liable for the overpayment

You may also receive correspondence notifying you of an IVA from the customer or their Insolvency Practitioner. HMRC does not require authority from the customer to deal with queries from the Insolvency Practitioner. However, it will be appropriate to refer most correspondence from Insolvency Practitioners - for example, notifications of changes to the IVA - to VAS (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Dates of claim and IVA dates

Generally, when working a case from the VAS spreadsheet, outstanding overpayments for finalised years prior to the year of the IVA are included in the IVA claim. Overpayments in the year of the IVA can be included in the IVA once that year has been finalised and renewed, regardless of the date of the IVA.  

When a customer returns their annual declaration (AD) before 1SD, within the restore period or have good cause if a late AD is accepted, the claim is ‘Treated as Made’ from 6 April. If the AD is late and good cause is not accepted the date of claim (DOC) is the date of the returned AD, subject to one month’s backdating.

Examples

1.

  • IVA date 25/05/15
  • AD received 02/07/16
  • claim treated as made 06/04/15
  • Any overpayment for 2015/16 is included in the IVA as the Treat as Made date is before the date of the IVA.

2.

  • IVA date 25/05/15
  • AD received 02/12/16, no good cause or backdating.
  • Any overpayment for the new 2015/16 is not included in the IVA as the DOC is after the date of the IVA. The overpayment for the terminated 15/16 claim will be included in the IVA.

3.      

  • Miss A enters an IVA on 22/4/15
  • Her single claim ends 01/11/15
  • She makes a joint claim, effective from 25/02/16 - the partner is not in an IVA
  • Following finalisation there is an overpayment on the single claim and another on the joint claim.
  • Although both overpayments are in the tax year of the IVA (2015/16), the customer’s share of the overpayment on the joint award is not included in the IVA as the DOC of the joint award is after the IVA date.

Unfinalised tax year(s)

If the date of IVA falls in a tax year that has not been finalised, you will need to note the ‘Unfinalised’ spreadsheet and BF the case until the case is finalised or the restore period has ended. This ensures that any relevant overpayments arising in that tax year are included in the insolvency.

This may also affect the previous year (PY) award where the IVA has been entered into during the provisional payment period. Their PY award will not have been finalised at that stage, and when it is, if there is an overpayment, this will need to be included in the claim for the IVA. This particular (PY) award is not in the year of IVA.

Where the award is unfinalised but there is an overpayment showing, this overpayment should be suspended, and not included in the IVA, as we need to wait for the award to be finalised to determine the actual overpayment to be included in the IVA.

Household notes

When updating Household Notes it’s important to include notes on all of the applicable households and to retain the notes under “Debt recovery”.

Checklist

Before you follow this guidance, make sure

  • you have the correct user roles to follow this guidance.
  • you are in the correct MU. Use TCM0322460 for the correct MU number
  • you have access to the VAS spreadsheet (VAS 37/2) and Insolvency Register.

Required information

Obtain the following information from the VAS spreadsheet

  • customer’s name
  • customer’s NINO
  • date of the Individual Voluntary Arrangement (IVA)
  • whether it is a joint IVA or a single IVA.

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.

Note: If both customers have set up an IVA at the same time, they will both appear on the VAS spreadsheet. You need to consider each entry separately in order to establish if there is any debt relating to previous claims either as a single person or as part of another household.

Note: Customers in a joint household may have their IVA approved on different dates. This may result in entries on the spreadsheet that appear to have been duplicated but they must be worked as new entries.

Note: If the customer and/or partner have been in more than one household, you must work each household separately.

Step 1

If you are dealing with a new entry on the Voluntary Arrangement Service (VAS) spreadsheet go to Step 2

If you are dealing with a WAM referral or another piece of IVA related correspondence, go to Step 6.

If you are dealing with an entry on the BF ‘Unfinalised’ spreadsheet go to Step 44

If you are dealing with a failed IVA go to Step 41

If you are dealing with a Universal credit claim go to Step 50

If you have received a reply from Notional Entitlement Team go to Step 13

If CAR debt has been transferred after adding an appeal or overpayment suspension marker go to Step 23

If you have TTP confirmation from DMB go to Step 27

If you have confirmation the Class 16 remission has been cancelled by DMB go to Step 36

If you are awaiting payment to be issued to customer go to Step 40

If you are awaiting payment to be issued for an entry on the BF ‘Unfinalised’ spreadsheet go to Step 48

Step 2

Check if the customer has a tax credit claim

If you are not authorised to access the case

  • follow the guidance in TCM0068160 
  • take no further action.

If there are no tax credits claims for the NINO provided

If there are tax credits claims for the NINO provided

Step 3

Check the NTC system to trace the correct NINO. For how to do this, use TCM1000115 

If you are able to trace the correct NINO, go to Step 4 to check for any IVA household notes

If you are not able to trace the correct NINO, take no further action.

Step 4

Check the NTC system for a household notes relating to IVA, for how to do this, use TCM1000067.

If there is a previous IVA household note for the same IVA details, take no further action.

If the IVA details are different

  • check with Voluntary Arrangement Service (VAS) to see if the first/previous IVA has failed or is completed
  • go to Step 41

If there are no IVA HHNs, go to Step 5

Step 5

If you are dealing with a new entry on the Voluntary Arrangement Service (VAS) spreadsheet

  • enter the following details from the VAS spreadsheet onto the IVA Worksheet
  • customer’s name
  • customer’s NINO
  • IVA date and the tax period it relates to
  • partner’s details, if appropriate
  • VAS reference number
  • the Insolvency Practitioner
  • go to Step 7

Step 6

Check the Insolvency register for a record of the customer

If the customer in shown on the insolvency register

  • email VAS with IVA details (VAS will update Book 1)
  • suspend the overpayments, for how to do this, use TCM1000335
  • update household notes with OD75 from TCM0166020. For how to do this, use TCM1000001
  • NFA

If the customer in not shown on the insolvency register

  • send the customer the letter TC2041
  • update the Debt Recovery category of Household Notes with the message OE22 from TCM0166020. Make sure you select the ‘Retained’ checkbox. For how to do this, use TCM1000001
  • take no further action. 

Step 7

Check if the VAS spreadsheet shows a partner for the customer

If a partner is shown on the VAS spreadsheet, go to Step 9

If a partner is not shown on the VAS spreadsheet, go to Step 8

Step 8

Check the tax credits computer to determine if the customer has a current partner. For how to do this, use TCM1000129.

If the customer does not have a current partner, go to Step 9

If the customer has a current partner listed on the VAS spreadsheet, go to Step 9

If the customer has a current partner not listed on the VAS spreadsheet

Note: Where the partner does not have an IVA, you must work the IVA entry as a joint household with only one customer in the IVA.

Note: Where the partner does have an IVA, you must work the IVA entry as a joint household with both customers in an IVA.

  • make a note of your findings on the IVA worksheet
  • email VAS with the partner’s details and include on daily intake sheet
  • go to Step 9

Step 9

Check all households relating to customer’s NINO to see if customer has been in any other households. For how to do this, use TCM1000301  

Note: In joint household cases where both customers have an IVA, check whether both customers have been part of another household.

If the customer has been part of another household

  • check Household Notes for a message that either customer has taken out a time to pay (TTP) arrangement with DMB following the household breakdown. For how to do this, use TCM1000067. Make a note if TTP arrangements apply.
  • check Household Notes for a message for either customer relating to bankruptcy. For how to do this, use TCM1000067 

Note: You will need to check all household notes including old notes for all years.

  • complete an IVA worksheet for each household

 Enter the following details from VAS spreadsheet on to IVA worksheet

  • customer’s name
  • customer’s NINO
  • IVA date and the tax period it relates to
  • partner’s details, if appropriate
  • VAS reference number

Note: if there are different IVA dates for any partners, complete a separate sheet for each partner

If the customer has not been part of another household

  • check Household Notes for a message that the customer relating to bankruptcy. For how to do this, use TCM1000067 

Note: You will need to check all household notes including old notes for all years.

  • complete an IVA worksheet for each household

Enter the following details from VAS spreadsheet on to IVA worksheet

  • customer’s name
  • customer’s NINO
  • IVA date and the tax period it relates to
  • the VAS reference
  • go to Step 10

Step 10

If it is a single claim or a joint claim with both in the IVA, go to Step 16.

If it is a joint claim and only one in the IVA, go to Step 15.

Step 11

Check for any Notional entitlement waiting to be considered.

Check Household Notes to find the date the customer reported the change to their household (HHBD). For how to do this, use TCM1000067 

If notional entitlement has already been considered go to Step 13

If the customer reported the change on or before 5 April 2012 within 93 days of the household breakdown

If the customer reported the change on or after 6 April 2012 within 31 days of the household breakdown

If the customer reported the change on or before 5 April 2012 over 93 days since the household breakdown

If the customer reported the change on or after 6 April 2012 over 31 days since the household breakdown

Step 12

Check if the case needs to be referred to the Notional Entitlement (NE) team.

 To identify if a case needs to be referred to the notional entitlement team

  • check household notes
  • in the ‘select household’ screen where the claim changes, from joint claim to single claim/single claim to joint claim, check the household start and end dates to see if there has been a break in their award.

If there is no gap between the dates and the award runs continuously then you do not need to refer the case to the NE team.  Go to Step 13  

If there is a gap (for example - household end date of 05/04/2012 and then start date of 03/09/12)

  • complete a referral for the Notional Entitlement team. Follow the guidance in TCM0224140 
  • when you receive a reply from the Notional Entitlement team, go to Step 13

If there is no notional entitlement to be considered

Step 13

Check the Insolvency register to see if both partners are in the IVA

If both partners are in the IVA, go to Step 16

If there is only one in the IVA

Step 14

Check the Insolvency register to see if the partner is in another IVA.

If the partner is in an IVA,

  • work the case as normal but inform VAS of the partner’s details and the outcome
  • go to Step 16.

If the partner is NOT in an IVA go to Step 15.

Step 15

Check the Insolvency register and household notes to check if there is a partner who is bankrupt

If there is a partner who is bankrupt, discuss the case with the Bankruptcy team.

Note: The bankruptcy team will advise whether they need to action the bankruptcy before any IVA action can be taken.

If there is a partner who is not bankrupt, go to Step 17

Step 16

Check the household to see if it is affected by Cross Award Recovery (CAR). To check if CAR applies, use TCM1000561. Also refer to the CAR Helpcard from the BIT team.

Starting with the latest award check each award to determine if CAR applies.

Check the year of the original overpayment.

Note: where you need to make a change or apply a remission to a tax year and the relevant claim for that tax year has an overpayment that has been transferred to an ongoing claim for CAR, you must transfer the overpayment back to its original tax year before you apply any changes or try to remit the debt.

You will

  • return any debt to the original account
  • check for recovered amounts on and after the IVA date
  • record the recovered amounts on the worksheet.

Note: if your scenario involves an ended single award with an overpayment and an ongoing joint award, then the CAR process may recover the single overpayment from the joint award. In this case enter an appeal/manual suspension marker to return the overpayment to the original award. Once remitted both the overpayment and the recoveries/set offs after the IVA date will be included in the single IVA. However the recoveries/set offs will be remitted in the joint award, and both cases need explanatory notes.

Note: under CAR a previous single overpayment can be recovered from an ongoing joint award. In this scenario recoveries/set offs made after the IVA date need to be noted on both cases but only included in the single IVA.

Note: Where an overpayment has originated from a single claim and is to be recovered by cross award recovery (CAR) from a joint claim, and then that joint claim ends, for example because of a HHBD, it can leave an outstanding overpayment on the joint claim. However, that debt may relate solely to the overpayment that came from the single claim.

Example - Ms A has overpayments of £2205 from her single awards. She makes a joint claim with Mr B and her overpayment was transferred to the joint award for cross award recovery. 

Their joint award £10538
   
Planned recovery £2051
HHBD – amended award £6939
Finalised award £5985
Actual payments made £5775
Overpayment recovery £1201    (£5775 + £1201= £6976)

 

Ms A went in to an IVA after the HHBD.

The actual payments made to the customer(s) totalled £5775. Their final entitlement was £5985. This leaves a difference of £210. This amount has been deducted from the £1201 recoveries that were supposed to have been made, leaving the £991 outstanding overpayment. In essence the recoveries haven’t been made and so because they have been adjusted (by reducing the single debt by £1201) by CAR transfer, then the amount is what’s left from the single debt but is sitting on the joint claim.

The outstanding overpayment, £991, should be remitted under the IVA process, and that amount should be included in the total IVA for the single claim. Although it is sitting on the joint claim it should not be classed as a joint overpayment with a joint 50/50 liability.

If CAR does not apply, go to Step 23

If CAR applies and the tax year you are going to take action on is CY to CY-5

  • enter an Appeal Marker on the original claim for the tax year from where the debt originated. For how to do this, use TCM1000444
  • update household notes with ON19 from TCM0166020*. *For how to do this, use TCM1000001
  • wait 24 hours to allow the debt to transfer back (check postings to ensure the debt has gone back to the original claim)
  • when you have all the information to action the case, remove the Appeal Marker.  For how to do this, use TCM1000453  
  • apply the changes/remission immediately to the original claim
  • do not delete the Household note as this clarifies that there has not been an appeal (appeal will show as closed on NTC)
  • go to Step 23.

If CAR applies and the tax year you are going to take action on is CY-6 or earlier

  • enter an overpayment suspension marker on the ongoing claim for the tax year that the debt has been transferred. For how to do this, use TCM1000335
  • update household notes with ON19 from TCM0166020. For how to do this use TCM1000001
  • BF for 5 working days to allow the debt to transfer back (check postings to ensure the debt has gone back to the original claim)
  • apply the changes/remission to the original claim
  • when all action is complete, remove the overpayment suspension marker (if appropriate)
  • do not delete the Household note as this clarifies that there has not been an overpayment dispute
  • go to Step 23
    Note: remember to remove any appeal and suspension markers once CAR payments have been returned.

Step 17

Check to see if a partner is deceased. For how to do this, use TCM1000186

If a partner is not deceased go to Step 20

If there is a deceased partner go to Step 18

Step 18

Check whether the claim ended because of the partner’s death or if the household breakdown was prior to the death. For how to do this, use TCM1000128

If the joint claim ended because of one partner’s death

  • 100% - remission will apply
  • go to Step 35

If the household breakdown was prior to the partner’s death

  • 50% remission will apply
  • go to Step 35

Step 19

Where the joint claim ended because of one partner’s death

  • remit 100% of outstanding overpayments For how to do this, use TCM0230060
  • bring all outstanding overpayments into the IVA, taking account of any adjustments,
  • update household notes with relevant OE03 and OD57 from TCM0166020. For how to do this, use TCM1000001
  • update Remissions database
  • go to Step 43

Where the household breakdown was prior to the partner’s death

Step 20

Check if the household is ongoing

Note: there is no need to consider CAR if the debt relates to the same claim because the overpayment is still to be collected.

If the household is NOT ongoing,

Note: This includes joint households that have ended, and there is no record of a household breakdown, neither customer has claimed as part of another household, and the address for both customers is not the same (can be checked in View Application).

go to Step 21

If the household is ongoing, only one person is in the IVA

Note: This includes joint households that have ended and there is no record of a household breakdown, neither customer has claimed as part of another household, and the address for both customers is the same (can be checked in View Application).

Note: if the overpayments in any tax year was originally under £100, do not include them on the TC880b. This does not include any overpayments that have been in recovery and now have less than £100 outstanding.

  • complete the IVA worksheet
  • remit the overpayment only where the original overpayments was under £100. Follow the guidance in TCM0230060, using the remission Class 5B
  • For any tax year where the original overpayment was £100 or more, issue TC880b
  • update household notes with OD85, OE35 and OD57 from TCM0166020. For how to do this use TCM1000001
  • go to Step 43

If the household is ongoing, only one person is in the IVA and there is no outstanding overpayment

  • complete the IVA worksheet
  • update household notes with relevant OD57 from TCM0166020. For how to do this use TCM1000001
  • go to Step 43

Step 21

Check if there is a household breakdown. For how to do this use TCM1000259

Note: it is possible for both parties in a household breakdown to enter into an IVA but on different dates and with different insolvency practitioners. In this scenario you will need to use two OD57 household notes to explain the differing details.

If it is not a household breakdown, go to Step 22

If it is a household breakdown

Note: that depending on the date of the IVA some years may have a 100% remission and some may have 50% remission.

For example, in tax year 06/04/14 only one partner of a couple was in an IVA so 50% remission will apply. In tax year 06/04/15 both partners of the couple were in an IVA so for that year 100% remission will apply.

Step 22

Check Postings screen to see if there are any Time to Pay (TTP) agreements. For more information, use TCM1000511

Note: Payments-In will have a description of ‘Payment In from claimant to pay CTC (or WTC) debt’.

If there are any TTPs make a note of them and go to Step 23

If there are no TTPs go to Step 23

Step 23

Check the type of claim

If the claim is a single claim

  • check all awards including terminated awards before the tax year of the IVA
  • note all outstanding overpayments
  • check for any remissions
  • check for any payments in or recoveries/set offs made on or after the date of the IVA
  • go to Step 24

If the claim is a joint claim and both in an IVA

  • check all awards including terminated awards before the tax year of the IVA
  • note all outstanding overpayments
  • check for any remissions
  • check for any payments in or recoveries/set offs made on or after the date of the IVA
  • go to Step 24

If the claim is a household breakdown,

  • check all awards including terminated awards before the tax year of the IVA
  • note all outstanding overpayments
  • If the overpayment amount was originally under £100, remit the amount. Follow the guidance in TCM0230060, using the remission Class 5B, update Household Notes with the message OD85 from TCM0166020. For how to do this, use TCM1000001, do not include in the IVA calculations
  • check for any remissions
  • go to Step 24

Step 24

Check if the year of the IVA has been finalised.

Note: if the claim ended in a tax year prior to the IVA year and customer has not made a new claim for the same ‘household set up’ follow the steps below, working the case the same as ‘an award in the tax year of the IVA has been finalised’.

If the award in the tax year of the IVA has been finalised and it’s a HHBD

If the award in the tax year of the IVA has not been finalised and it’s a HHBD

  • note the case on the ‘Unfinalised’ spreadsheet
  • suspend any overpayment in the tax year of the IVA, but do not include in IVA
  • update household notes with OD75 from TCM0166020. For how to do this, use TCM1000001 
  • go to Step 25

If the award in the tax year of the IVA has been finalised

If the award in the tax year of the IVA has not been finalised

  • suspend any overpayment in the tax year of the IVA but do not include in IVA
  • update household notes with OD75 from TCM0166020. For how to do this, use TCM1000001
  • add case details to ‘Unfinalised Spreadsheet’
  • go to Step 35

Step 25

If you found a TTP message for both customers at Step 9, go to Step 26

If you found a TTP message for only one customer at Step 9, go to Step 26

If you did not find a TTP message at Step 9, but the award ended because of a household breakdown 

  • add the outstanding overpayment figure you have previously calculated
  • calculate 50% of the total using the insolvency calculator
  • Note: calculate 50 per cent of the outstanding overpayment only.
  • go to Step 33

Step 26

Check whether the payments-in tally with the TTP agreement you noted at Step 22. For how to do this, use TCM1000511.

If you can tell how much has been paid in by the customer with the IVA, go to Step 27

If you cannot tell how much has been paid in by the customer with the IVA

 

Step 27

To calculate the outstanding overpayment

  • use the Insolvency calculator  to calculate 50 per cent of the amount of the outstanding overpayment before the TTP was put in place. For how to do this, use TCM1000200 
  • go to Step 28

Step 28

If the customer with the TTP is also the customer with the IVA, go to Step 29.

If both customers have a TTP but you have worked out how much has been paid in by the customer with the IVA, go to Step 29.

If the customer with the TTP is not the customer with the IVA, (this is the former partnera) go to Step 31

Step 29

Compare the TTP paid in with the amounts you calculated at Step 22

If the amount the customer has paid in under the TTP (this is amount (a)) is less than the figure you calculated at Step 22 (this is amount (b))

  • subtract amount (a) from amount (b). The remaining figure is the amount you will need to remit and include in the IVA as an overpayment for that award period
    For example: the outstanding overpayment before the TTP is £1,000.00. The customer has paid in £200.00 under the TTP (amount (a)). The customers liability towards the overpayment is £500.00 (amount (b)). Subtract amount (a) from amount (b) leaving £300.00 to remit.
  • if there is an outstanding overpayment which you have calculated falls to the former partner to repay, complete the joint and several liability form for DMB to tell them that the customer’s former partner is responsible for the balance of the overpayment. Email the form to ‘(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • go to Step 33.

If the amount the customer has paid in under the TTP (amount (a)) is equal to, or greater than, the figure you calculated at Step 26 (amount (b)), go to Step 30.

Step 30

There is no amount to remit or include in the IVA as an overpayment for that award period

If there is still an outstanding overpayment to be recovered

  • complete the joint and several liability form for DMB to tell them that the customer’s former partner is responsible for the balance of the overpayment
    For example: the outstanding overpayment before the TTP is £1,000.00.The customer has paid in £600.00 under the TTP (amount (a)). The customers liability to the outstanding overpayment is £500.00 (amount (b)). As amount (a) is greater than amount (b), the former partner is responsible for the balance of £400.00.
  • go to Step 33.

If there is not an outstanding overpayment to be recovered because the customer has already paid back the full amount, go to Step 33.

Step 31

If the amount the customer (former partner) has paid in under the TTP (amount (a)) is less than the figure you calculated at Step 22 (amount (b))

  • the amount you calculated at Step 18 (amount (b)) is the amount you need to remit and include in the IVA as an overpayment for that award period
    For example: the outstanding overpayment before the TTP is £1,000.00. The former partner has paid in £200.00 under the TTP (amount (a)). The customers liability to the overpayment has been calculated as 50% and is £500.00 (amount (b)). Remit £500.00 leaving £300.00 to recover from the former partner under the TTP.
  • complete the joint and several liability form for DMB to tell them that the customer’s former partner is responsible for the balance of the overpayment, that is 50 per cent of the overpayment less the amount that the former partner has already paid in
  • go to Step 33.

If the amount the customer (former partner) has paid in (amount (a)) is greater than or equal to the figure you calculated at Step 22 (amount (b)), go to Step 32.

Step 32

If there is still an outstanding overpayment to recover

  • the outstanding overpayment is the amount to remit and include in the IVA as an overpayment for that award period
    For example: the outstanding overpayment before the TTP is £1,000.00.The former partner has paid in £600.00 under the TTP (amount (a)). The former partner was liable for 50 per cent of the overpayment is £500.00 (amount (b)) but has paid in 60 per cent of the overpayment. The outstanding overpayment is only £400.00 (£1,000.00 less £600.00). Remit £400.00 leaving the customer’s account balanced.
  • go to Step 33.

If there is not an outstanding overpayment to recover because the former partner has repaid the full amount

  • there is not an amount to remit or include in the IVA as an overpayment for that award period
  • go to Step 33.

Step 33

To calculate the total overpayment to be included in the IVA for all award periods finalised or terminated on or before the IVA date, add together the following as appropriate.

Note: Depending on the customer’s individual circumstances some of the bulleted items may not be available to include in the overpayment

If the award period is covered by a TTP

If the award period is not covered by a TTP and the award period ended due to a household breakdown

  • the 50% of any overpayments amounts you calculated at Step 25
  • go to Step 34

Step 34

If there are TTP agreements

If there are NO TTP agreements

Step 35

Check if any overpayment is less than £100. This applies to overpayments that were never greater than £100. This does not include overpayments that have been in recovery that has reduced the amount outstanding to less than £100.

If there is no overpayment, go to Step 36

If the overpayment amount is £100.00 or more, go to Step 36.

If the overpayment amount is under £100.00,

  • remit the amount. Follow the guidance in TCM0230060, using the remission Class 5B
  • update Household Notes with the message OD85 from TCM0166020. For how to do this, use TCM1000001 
  • do not include in the IVA
  • go to Step 36

Step 36

Check for any remissions and make a note of each of the remission class. For how to do this, use TCM1000196 to check the remission class and TCM1000027 to check any class 16 remissions.

If there are no remissions go to Step 38

If the auto remission is Class 16 and over £200.00

Note: Do not take any action on auto remits of £200.00 or less

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  
  • BF the case to check if the Class 16 remission has been cancelled
  • update household notes with OE40 from TCM0166020. For how to do this, use TCM1000001 
  • regularly check household notes and View account summary to check if the Class 16 remission has been cancelled 
    Note: you will not be notified that the remission has been cancelled
  • when the remission has been cancelled make a note of the amount of the remission on the IVA worksheet
  • go to Step 38

If the remission is Class 5B 

  • check Household Notes to determine if the remission has been done under Class 5B because Class 2 was not available. For how to do this, use TCM1000067 
  • go to Step 37

 If the remission is Class 4, Class 13, Class 10 or Class 11

  • do not include in the IVA

Note: Class 4 remission is ‘not worth further pursuit’.  Any TC debt currently remitted will not move over to UC.  Debt Management’s current steer is that ‘class 4’ debts will not be pursued. Therefore any class 4 remissions will not be included in the IVA.

Step 37

If the remission was done under Class 5B because Class 2 was unavailable

  • note the amount of the remission on the IVA worksheet 
  • go to Step 38.

If the remission was done under Class 5B because there was official error

  • do not include in the ‘IVA
  • go to Step 38

If the remission was done under Class 13 because Class 5B was unavailable

  • do not include in the IVA
  • go to Step 38

Step 38

If you are dealing with a deceased partner go to Step 19

If you are not dealing with a deceased partner go to Step 39

Step 39

Check if there is an overpayment

If there is an overpayment

  • remit the calculated amounts
  • remit as class 2 remission, or remit as class 5b if class 2 is not available
    Note: where class 5b is not available, cancel previous 5b remission and remit the new total amount including the previously remitted amount and the new amount for remission. Update household notes with OE39  from TCM0166020, for how to do this, use TCM1000001
  • complete the remission database
  • update household notes with OE03 and OD57 from TCM0166020. For how to do this, use TCM1000001 
  • go to Step 40

If there is no overpayment

  • update household notes with OD57 from TCM0166020, for how to do this, use TCM1000001
  • complete MS164, for how to do this, use TCM1000292
  • BF until after the first specified date (1SD) if appropriate
  • go to Step 40

Step 40

Check if there are any amounts to be repaid that were recovered on or after the IVA date, for how to do this, use TCM1000200

Note: If you need to remit any amounts ‘Recovered from other Awards’ after the IVA date, you should remit in the year the recovery has been made from if possible.

For example: if £200.00 has been recovered from the award for tax year 2013-2014 for an overpayment created in tax year 2009-2010, you should remit £200.00 in tax year 2013-2014.

Note: In Household breakdown cases where either customer has been discharged from bankruptcy they are no longer liable for the debt and a remission under class 2 will show on the NTC system. In these cases, the amount of the original remission will need to be added to the amount you have calculated to be included in the IVA to let you make the remission on the NTC system.

For example: the outstanding overpayment for the tax year 2013-2014 is £600.00 (amount (a)). The system shows a manual remission under class 2 for £600.00. Household Notes confirm this is due to discharged bankruptcy for the former partner. You have established the IVA amount to be included in the overpayment would be £600.00 (customers 50 per cent liability). You would need to cancel the £600.00 remit (amount (b)). Add together amounts (a) and (b) to obtain the amount of £1200.00 to remit on the system. (£600.00 against discharged bankruptcy and £600.00 towards the customers IVA calculation)

If there are no amounts to be repaid

  • update household notes with OD57 from TCM0166020 for how to do this, use TCM1000001
  • complete MS164, for how to do this use TCM1000292
  • consider if case needs to be added to ‘Unfinalised spreadsheet’ and BF until after 1SD
  • go to Step 43

If there are amounts to be repaid to customer

  • remit as class 5b
  • BF for 5 days until payment is issued.
    Note: this allows time for the payment to be issued and ensure it has not been cancelled. If the payment is cancelled it will fall on a worklist, to be worked by the Applicant Failed Payments team. Do not issue the letter.
  • when payment made, issue letter TC2042 to customer where refunding time to pay(TTP) payments made after the date of the IVA
    Note: no letter is issued where the recovery has been made from the tax credit award
  • Update household notes with OE03 and OD57 and OE23 if a TC2042 issued from TCM0166020. For how to do this, use TCM1000001 
  • Complete MS164, for how to do this use TCM1000292
  • update the remissions database
  • add details to ‘unfinalised spreadsheet’ for the relevant tax year(s), if appropriate
  • go to Step 43

Step 41

If the IVA has not failed

If the IVA has failed

  • cancel all previous IVA remissions

Note: When we receive notification of a failed IVA from VAS, they may advise us that a dividend has been received. This is an amount received from the Insolvency Practitioner (IP) in part payment of the amount we claimed through the IVA.  When we cancel the remits that we did on first notification, we need to re remit any repayments received, starting with the oldest overpayment first.

Example

  • £2500 input to the IVA, (this amount was remitted on our system)
  • IVA fails and we cancel the remit,
  • IP has repaid £500 to VAS, which they confirm
  • cancel the remit of £2500
  • remit £500 leaving £2000 outstanding
  • update household notes with failed IVA message OE01, from TCM0166020. For how to do this, use TCM1000001
  • go to Step 42

Step 42

Check the Insolvency register for a new IVA date

If there is a new IVA date

Note: work the failed IVA first

If there is NOT a new IVA date

  • send the casepapers to storage
  • take no further action.

Step 43

  • Check if there are other households to work

    If there are any other households to work, go to Step 3

    If there are no other households to work, PA case

Step 44

At the end of the renewal period/restore period, select case from ‘Unfinalised’ spreadsheet (after 31 July).

Check if the IVA has failed

If the IVA has failed,

  • update finalisation spreadsheet
  • take no further action.

If the IVA has not failed, go to Step 45 

Step 45

In function View Award Check if the award in the tax year including the date of the IVA has been finalised.

Note: if you are dealing with cases from the spreadsheet before the end of the automatic 60 day restore period and the award has been terminated, BF the case to the end of the automatic restore period (around 30 September) to check if the case has been restored.  Note: A finalised award will have an award type of ‘Final Act’, ‘Final As Act’ or ‘Final Man’. An award type of ‘Final Est’ does not count as a finalised award for an IVA.

Note: Where the customer has submitted more than one claim and there is not a finalised award or SOA on the latest claim, you must check the previous claims.

If the award has been finalised, go to Step 47

If the award has not been finalised, go to Step 46 

Step 46

Check if the award in the tax year including the date of the IVA has been renewals terminated

If the award has been renewals terminated, and it is after the after the automatic restore period go to Step 47

If the award hasn’t been renewals terminated

  • leave the entry on the Unfinalised spreadsheet
  • BF to a later date (if appropriate)

Step 47

Check if there is an overpayment for the finalised award

If there is no overpayment, go to Step 48

If there is an overpayment

  • remit the overpayment as class 2 of class 5b if class 2 unavailable. Follow the guidance in TCM0230060
  • add the overpayment amount to any previous figures included in the IVA household note
  • update household notes with OE03 from TCM0166020. For how to do this, use TCM1000001 
  • complete the IVA worksheet.
  • go to Step 48

Step 48

Check for any recoveries/set offs after the date of the IVA for an overpayment that occurred in the tax year of the IVA.

If there are no recoveries/set off after the date of the IVA for an overpayment that occurred in the tax year of the IVA, go to Step 49

If there are recoveries/set offs after the date of the IVA for an overpayment that occurred in the tax year of the IVA,

  • complete the IVA worksheet with the recoveries/set offs made
  • BF for 5 days until payment is issued (this allows time for the payment to be issued and ensure it has not been cancelled. If the payment is cancelled it will fall on a worklist. Do not issue the letter)
  • when payment made, issue letter TC2042 to customer where refunding time to pay(TTP) payments made after the date of the IVA
    note: no letter is issued where the recovery has been made from the tax credit award
  • remit the recovered amount in CY, follow the guidance in TCM0230060
  • remit any outstanding overpayment in PY, follow the guidance in TCM0230060
  • update household notes with OE23 if a TC2042 is issued, OE03 and OD57, revisited option, from TCM0166020. For how to do this, use TCM1000001
  • complete MS164, for how to do this use TCM1000292
  • go to Step 49

Step 49

  • if not already done, update household notes with OD57, revisited option, from TCM0166020. For how to do this, use TCM1000001
  • delete OD75 about payment suspension, follow TCM152120
  • remove the suspended overpayment marker, for how to do this use, TCM1000327
  • update the Unfinalised spreadsheet
  • prepare the case for storage, if appropriate
  • no further action

Step 50

Where the case has transferred to Universal Credit

  • B/F the case to await a steer for working the cases  
  • update household notes with OD75 ‘IVA case. Awaiting further guidance on the debts that have transferred to Universal Credits. CP05/06/06 ’Do not disclose’ from TCM0166020. For how to do this, use TCM1000001