CCM8126 - Closing the Examination: In-Year Recoveries for Claims Made in the Wrong Capacity

Where there was no entitlement to tax credit because the claim was made in the wrong capacity we do not have the power to require the claimant to repay this in-year. The claim will have been made in the wrong capacity where

• the claim was made by a single person when they were a member of a couple for the whole period of claim or
• the claim was made by a couple when they were never a couple at any time during the period of claim.

How you handle the in-year overpayment will depend on the method of settlement.

Non-contract settlement

You must tell the claimant the amount of the in-year overpayment as the amount will not vary. Tell them you are terminating their award and they will be asked to repay the overpayment but they do not have to do so until after the end of the tax year. If you have established neglect you should tell them that if they have not repaid the monies within 30 days of the first specified date (see CCM11045). You will need to complete an interest stencil.

You must make an entry on household notes to show the CY overpayment relates to a LTAHAW or LTACP case or the claim by a couple should have been made by single claimants.

If the claimant wishes to repay the overpayment straight away you can prepare a payslip in accordance with CCM8700.

Contract settlements

Although we cannot require a claimant to repay the overpayment in-year we can still include such an overpayment in a negotiated contract settlement. This is because there is an overpayment and the claimant voluntarily offers to pay back the money.

In many cases you will be seeking an instalment offer and the repayment in respect of the CY will not start until after the end of the current tax year.

If you are seeking a lump sum offer you can still include the CY overpayment with the claimant’s agreement. Alternatively, you could make this into an instalment offer with two instalments. The PY overpayment(s) would be payable as normal and the CY overpayment would be payable after the end of the tax year.

If the CY overpayment will be repaid before 30 days following the first specified date (see CCM11045) you should not include any statutory interest on this part of the overpayment.

You will need to use Make Remission to remit the overpayment included in the offer to avoid the NTC system taking duplicate recovery action.