CCM14268 - Closing the Enquiry: Penalty cases: Amending the award: award not continuing for reason other than compliance enquiry.

In certain circumstances, the award will have already ceased for reasons other than the enquiry (for example household breakdown). It is possible there may be an existing overpayment on the system which is in direct recovery as a result of a previous decision. In addition, the overpayment may have been partly recovered by cross year recovery and the balance on the later year could now also be in direct recovery as a result of the award ceasing.

In these circumstances, check household notes to establish if DMB have started recovery action for the amount in direct recovery, not doing this may lead to double recovery.

Where DMB have not commenced any action, you should try to recover all of the overpayment in your settlement. However, only the amount of overpayment generated by the compliance decision will attract interest and should be used in any penalty calculation.

Once you have issued the letter at CCM14260 begin the process of amending the award. This must be carried out in 3 stages

Stage 1 - Take a screen shot for each year covered by the enquiry (including the CY if there is an amendment for that year) before the amendment is made. The screen shots should be saved in casebook

The screen shots for enquiry years (or any years involving a discovery) will show the position at finalisation before the amendment is made. The screen shots for CY will show the position at the point where the award ceased.

Stage 2 - Revise the awards for all relevant years. Where adjustments are needed for more that one year start with the earliest year. Always adjust an earlier year before a later one.

Stage 3 - When the amendments have been processed on system, take further screen shots for each year to show the revised position. It is important to wait a further 2 days after the amendments have been processed and the revised awards issued before attempting to use Make Remission, otherwise the system may not reflect the correct overpayment. If the system has not been updated to show the revisions continue to monitor this on a daily basis until they have been implemented

The screens shots should now show a figure of overpaid credits for the enquiry years including any amounts already overpaid. The position for CY depends on the nature of the adjustments made. Having taken the screen shots you must save them in Casebook before calculating the amount of the overpayment to be included in your contract settlement. Then use Make remission to remit the correct amount. Not doing this leads to double recovery, once in the contract settlement and once by direct recovery on the system. If part of the overpayment is already in direct recovery and DMB have commenced action, do not include this amount in the contract settlement or remit it see Example 1 below. Where no action has been taken, the total overpayment can be included and remitted in full, see Example 2 below.

For the CY you should only use Make Remission where the overpayment was recoverable in-year (see CCM8125 and CCM8126 and will be included in the contract settlement.

Once the revised awards have been issued you should BF your papers for 40 days to allow for any appeal to reach you. Your next action will depend on the following:-

• if there is any appeal - see CCM14270
• if the claimant contacts you before the end of the appeal period asking for this matter to be brought to an end - see CCM14275
• if there is no appeal you will need to contact the claimant to discuss their ability to meet the settlement and follow the guidance at CCM14278.

Example 1

The finalised position for 2008/2009 following the S18 decision is a tax credit award of £2,615,00. The amount paid in the year was £3,425,00 resulting in an overpayment of £810,00. When the S18 decision was made, this overpayment was to be recovered cross year at a rate of 25% per year (ie £202.50 per year). However, the household broke down 6 months later and only £101.25 had been recovered from the payments made for 2009/2010. As a result of this, the system shows an overpayment outstanding of £607.50 for 2008/2009 (810.00 less £202.50) and £101.25 for 2009/2010 (£201.50 less £101.25).

As a result of the compliance enquiry, the 2008/2009 award is reduced further from £2615.00 to £1500. This further reduction of £1115.00 increases the total overpayment for 2008/2009 to £1925.00 (810.00 plus £1115.00). As £202.50 of this overpayment has already been reallocated to 2009/2010, the system now shows £1722.50 overpaid on 2008/09.

DMB have confirmed they are already in the process of recovering the original overpayment of £607.50 on 2008/209 and £101.25 on 2009/2010. To prevent recovery action being taken twice for the same amount, Make Remission should be used to remit the difference between the amount now showing as overpaid on the system for 2008/2009 (£1722.50) and the amount already being recovered directly (£607.50). The amount to be remitted on 2008/2009 is therefore £1115.00 for 2008/2009 and this is the amount to be included in the contract settlement.

However, if the claimant wants to settle all the debts under one contract, you should speak to the DMB office dealing with the case.

Example 2

The finalised position for 2008/2009 following the S18 decision is a tax credit award of £3125.00. The amount paid in the year was £6400.00 resulting I an overpayment of £3275.00. When the S18 decision was made, the overpayment was to be recovered cross year at a rate of 10% per year (ie £327.50 per year). However, the household broke down 3 months later and only £81.87 had been recovered from payments made for 2009/10. As a result of this, the system shows an overpayment outstanding of £2947.50 for 2008/2009 (£3275.00 less £327.50) and £245.63 for 2009/2010 (£327.50 less £81.87).

As a result of a compliance enquiry, the 2008/2009 award is reduced further from £3125.00 to £2175.00. This further reduction of £950.00 increases the total overpayment for 2008/2009 to £4225.00 (£3275.00 plus £950.00). As £327.50 of this overpayment has already been reallocated to 2009/2010, the system now shows £3897.50 overpaid on 2008/2009.

DMB have confirmed the overpayment of £2947.50 on 2008/2009 and £245.63 on 2009/2010 is not currently in direct recovery and no action is being taken by them so Make Remission is used to remit ££3897.50 for 2008/2009 and £245.63 for 2009/2010 and these amounts will be included in the contract settlement.