Minutes of the Tax Credits Consultation Group (TCCG) meeting - 19 May 2009

Attendees

HMRC

Paul Becker
Andrew Burland
Martine Clark
Tracy Gale
Michael O’Connor
Kevin O’Hanlon
Cliff Sale
David Skinner
Helen Smith

HMT

Frank Carson

DWP

Chris Burston

Representatives

John Andrews - Low Incomes Tax Reform Group
Maureen Arthur - National Association of Welfare Rights Advisers
David Brodie - TaxAid
Angela Foreman - Enfield Homes
Bernie O’Gorman - Local Government Association
Siobhán Harding - Citizens Advice (Northern Ireland)
Beth Lakhani - Child Poverty Action Group
Katie Lane - Citizens Advice
Victoria Todd - Low Incomes Tax Reform Group
Angela Williams - Institute of Chartered Accountants of England & Wales
Robin Williamson - Low Incomes Tax Reform Group

Apologies

Jane Hayball - Local Government Association
Matthew Lancashire - Citizens Advice
Frances Robinson - Local Government Association

1. Welcome

Tracy Gale welcomed everyone to the meeting. She introduced Frank Carson (HM Treasury) and Chris Burston (Department for Work and Pensions) who attended the meeting to provide a Budget update and information around economic downturn measures.

2. Update on actions from last meeting

Andrew Burland gave an update on actions that had arisen at the last meeting.

  • AP MAR0901: the action point log was issued.
  • AP MAR0902: to be discussed during the meeting.
  • AP MAR0903: information will be provided in the operational update.
  • AP MAR0904: HMT and DWP representatives attending the meeting.
  • AP MAR0905: Tax Credits Transformation Programme delivery update has been issued.
  • AP MAR0906: an update was sent following the last Consultation Group meeting. A further debt meeting was held on 28 April and an update of the points covered in this meeting will be distributed shortly.
  • AP MAR0907: an updated draft of the appeals leaflet was circulated. Robin Williamson asked what the status of the leaflet is. Andrew said that this would form part of a separate appeals meeting (see AP MAR0909).
  • AP MAR0908: Childcare Affordability slides from DCSF were circulated.
  • AP MAR0909: the issue of subgroup meetings is still under consideration. Andrew said that he is still awaiting information from Beth Lakhani before an appeals meeting can be organised.
  • AP MAR0910: ongoing.
  • AP MAR0911: awaiting information from Beth Lakhani.
  • AP MAR0912: awaiting information from Beth Lakhani.
  • AP MAR0913: information about need for joined-up leaflet on help available to parents received.
  • AP MAR0914: ongoing.
  • AP MAR0915: ongoing. Andrew confirmed that there is nothing in HMRC’s guidance to prevent claim forms being issued. Victoria Todd said that there were instances where Contact Centre staff refused to issue claim forms if they did not think the customer would be entitled to tax credits or if someone other than the customer contacts HMRC. Andrew said that Contact Centre staff have been reminded that they should issue claim forms. He asked representatives to inform HMRC if they continue to encounter problems.

Katie Lane said that Paul Gerrard told representatives at the last meeting that there would be a helpline for complaints and disputes. Andrew said that this helpline is now operating. He said that HMRC will provide the representatives with further information about this in the operational update to be issued shortly.

John Andrews asked what is happening with the sub-groups. Andrew said that following internal HMRC restructuring it was necessary to reconsider the chairs of the various sub-groups. He said that a new chair for the Migrants group would be appointed soon. John suggested that the HMRC sub-group meetings around migrants could be combined with the meetings DWP hold on this subject. Tracy Gale said that HMRC would look at the possibility of combining meetings with DWP.

Katie Lane said that there are a lot of issues that need to be considered around passporting, both from a policy and a practical standpoint. She said that she considers ownership of this subject still sits with HMRC. Tracy Gale said that she would consider who is best placed to take this forward.

Bernie O’Gorman mentioned problems around customers receiving the four week run-on of Working Tax Credit and the working of the DCSF hub for obtaining free school meals, etc. Beth Lakhani said that there is added difficulty in that some run-on payments are received late. David Skinner said that he would look into this issue and report back to the group.

3. Budget update/economic downturn measures

Frank Carson (HM Treasury) provided an update on measures included in the Budget. He said that the key figures were

  • employment rate has fallen 1 per cent in the last year
  • unemployment has increased by 600,000
  • claims for JSA have increased to around 1.5 million
  • the number of vacancies each month is approximately 0.5 million

The following measures were included in the Budget

  • Support for jobs including fiscal stimulus and quantitative easing which could act to support up to 450,000 jobs.
  • For those facing redundancy:
    • an increase in Statutory Redundancy Pay
    • expansion of the Rapid Response Service
    • extending Train to Gain
    • establishing Skills Hubs to match employees with new jobs in sectors with long-term skills shortages.
  • Helping the unemployed swiftly back into work by providing an additional £1.7 billion at Budget and £1.3 billion at PBR for Jobcentre Plus to deal with new customers. This has helped over 1 million people to move into employment since November 2008.
  • For the long-term unemployed:
    • a £1.2 billion jobs package guaranteeing a job, training or work placement for all 18-24 year olds who have been claiming JSA for more than 12 months
    • funding for local authorities and the voluntary sector to provide 100,000 jobs in socially useful activity
    • 50,000 work placements and pre-employment training for growth sectors
    • 50,000 traineeships for young people in the social care sector
    • up to £1,000 for employers who recruit those unemployed over six months
    • a further £1,500 for Train to Gain in England
    • up to 70,000 work-focused training places
    • help for those who want to become self-employed.

Frank said that support for mortgage interest with IS/JSA will be maintained at 5.08 per cent, despite the Bank of England base rate having been reduced to 0.5 per cent. The Social Fund will be increased by £125 million this year and £145 million next year.

Chris Burston (DWP) said that Jobcentre Plus has substantially more work as a result of the downturn but have more staff to deal with this. DWP are moving staff to focus on Jobcentre Plus activity.

Chris said that in addition to planning to use the additional resources effectively, DWP was planning changes that would increase efficiency and substantially improve the customer journey. DWP’s change programme had three key objectives:

  1. ‘No wrong door’; providing the service that the customer needs at whichever point of contact is chosen.
  2. ‘Right first time’ – avoiding un-necessary re-work and nugatory contact.
  3. ‘Once and done’ – as far as possible, handling all business with the customer at the point of first contact.

There is a range of initiatives aimed at delivering these goals. They include the In and Out of Work pilots, developed with HMRC and local government. This pilot is increasing access to Jobcentre Plus for the newly unemployed and offering a ‘seamless’ service for customers moving into work. The project is now moving beyond the pilot phase with a view to national rollout as resources allow.

Beth Lakhani asked whether it was still planned to roll out the In and Out of Work pilot nationally this year. Chris said that he was not aware of an agreed timescale for national roll-out: this would depend on available resources and detailed planning.

John Andrews:

  • Said HMRC are not including tax credits in their ‘Tell Us Once’ campaign on tax issues, and asked for HMRC to pass this on to those responsible for this campaign.
  • Said HMRC have announced they will increase the number of WTC claimants by 100,000, but this sounded difficult to achieve in a reducing job market. Tracy Gale said that this is a challenging target. She said she would send representatives further information on this figure.
  • Asked whether HMRC are joining with voluntary organisations over job creation. Tracy Gale said that this has been included in the HMRC plan.
  • Said that there could be double-counting of the number of job vacancies (for example where the same job was advertised with more than one employment agency). Frank Carson said that this is not the case and that the number of vacancies is checked by the National Audit Office.

David Brodie suggested that we establish a confidential helpline for people involved in the informal economy. Tracy said that she would take it away to think about.

Beth Lakhani asked whether there should be special rules for people who have been laid off to still be treated as in remunerative work for Working Tax Credits purposes, as they can be worse off by moving into the benefit system otherwise. David Skinner said that a note had already been circulated about Working Tax Credit payments in these circumstances, but said that he would re-issue it to representatives. HMRC agreed to set up a small group, which will include DWP, to look at this general issue.

Robin Williamson asked why measures to help young people into work were stating that this was for 25 hours rather than 30 hours (as this is the qualifying condition for Working Tax Credit for that group). Frank Carson said that funding provides for a minimum of 25 hours, but this doesn’t prevent higher hours being offered/funded, if possible.

Katie Lane said that she had concerns about the possible effects on Housing Benefit. For customers whose income suddenly decreases through redundancy, there is a possibility that they will be worse off if they inform TCO of the change as the increase in tax credits is clawed back by Housing Benefits. It is important therefore that the tax credits Helpline gives customers the right advice about how to calculate their income for the year, particularly where there is a possibility that the customer’s income could increase again during the year. David Skinner said that HMRC will look at the advice given by Helpline about income to people who have been made redundant. HMRC will also need to look at the interaction between overpayment recovery rates and fluctuating income.

John Andrews said that, for migrants, HMRC is telling people it does not need to know about overseas employment income of less than £10,000 for tax purposes. This is an issue for tax credits, as this income does need to be declared for tax credits claims. HMRC said that they would look at the messages being given to customers to avoid confusion.

4. Renewals update

  • The key message for customers is that they should renew early.
  • The window for renewing is the same as last year; the first specified date is 31 July.
  • People should renew early to reduce the amount of time they are receiving provisional payments and the possibility of building up overpayments.
  • People who fail to renew their claims within the appropriate time will lose entitlement and will have to make a fresh claim.

HMRC said that they started issuing renewal packs on 9 April 2009. Packs are sent out in priority order with packs for the most vulnerable groups being sent out first. HMRC are now processing renewals.

In addition to returning renewal packs by post, customers can renew their claim by telephone. HMRC contact centres have already received more phone calls about renewals than at this time last year.

HMRC said that they will run a marketing campaign around renewals. This will be in three stages:

  1. awareness
  2. prompting
  3. deadline (from mid-July)

There will be posters in all Jobcentre Plus Offices encouraging customers to contact HMRC for help and telling them that their money will stop if they do not renew.

HMRC said that there is a range of activities to help customers renew:

  • Letters have been issued to 73,000 customers who are renewing their claim for the first time and who have a tax credits award of more than £2,500 per year and have children. These customers are asked to contact HMRC who will then help them through the process to renew their claim. This service is well received by customers.
  • 2,000 customers who have previously been paid manually but whose claims are now paid automatically, and this is their first renewal, will also receive help in renewing their claim.
  • In July HMRC will aim to contact 13,000 customers who have a degree of dependency and have not already renewed.
  • 45 HMRC staff are involved in pilots where it is known customers have more factors to take into account when renewing, for example those with childcare costs. HMRC are also working directly with third sector organisations.
  • Interactive Voice Response (IVR) is being used on telephone systems to help manage capacities. Customers are being told what information to have to hand when telephoning to renew.

Representatives were asked that they remind customers of the need to renew early and to have their National Insurance number and income details available when they renew.

Katie Lane said that representatives had been promised involvement in next year’s planning for renewals. Helen Smith said that HMRC need to concentrate on this year’s renewals but she was considering how HMRC could best work together with representatives.

Katie Lane said that she was concerned that the messages being given did not include information for those who were not renewing a claim, but who still needed to act to finalise their previous claim (for example where a couple have split up during the year). Helen Smith said that HMRC would look into the possibility of separate messages for customers in these circumstances.

Victoria Todd said that:

  • some customers were reporting that they are being told that they cannot report changes of circumstances until they receive their renewal packs
  • some customers who are self-employed are told to report their income by 31 January; they are not being told to give an estimated income figure before this
  • where the deadline is missed, some evidence shows that re-instatements are not being made and cases are going into manual payment

HMRC said that they would investigate this.

Victoria asked whether customers who renew over the telephone are asked to confirm all of their circumstances specifically, or are just asked whether there have been any changes in their circumstances. HMRC said that they would check the relevant scripts.

Beth Lakhani asked whether it is possible for one customer only to sign the renewal for a couple as this is causing delays. HMRC said that they would double-check this.

John Andrews asked whether customers might be turned away from HMRC Enquiry Centres because some staff have insufficient knowledge of tax credits. Helen Smith said that Enquiry Centre staff have received the necessary training to handle tax credits enquiries. John said that he will arrange for a mystery shopping exercise to ensure that Enquiry Centres can deliver assistance around tax credits. Tracy Gale said that HMRC will welcome this input.

5. Operational update

David Skinner gave a brief operational update and explained that the full written update would be circulated to representatives.

Siobhán Harding said that HMRC staff cannot see that there is a form of authority for Child Benefit when a claim is not in payment. HMRC said that they are investigating this.

Katie Lane asked if there is still a problem with manual cases being passed to Debt Management where the debt is not established. Tracy Gale said that this issue would affect mainly older cases. HMRC will check the process with Debt Management colleagues.

Victoria Todd asked which team in TCO should be dealing with Official Error cases, as she was experiencing problems where HMRC staff did not seem to be fully aware of the provisions in legislation. David Skinner said that HMRC would look into this.

Victoria Todd said that an award notice should be issued in direct recovery cases but this does not appear to be happening. Andrew Burland said that HMRC would look into this.

Beth Lakhani asked whether HMRC only recover WTC from WTC payments, and how this is distinguished when more than one year is involved. David Skinner confirmed that HMRC would check on the position and inform the representatives.

Beth Lakhani asked whether customers are encouraged to come to HMRC for an explanation about how their overpayment has arisen. HMRC said that they would consider the advice customers are given on this in correspondence it sends to them.

Katie Lane expressed concern about the length of time that it takes for some cases to be written off. She suggested that some sample cases be analysed to establish why it takes so long to write them off and that representatives provide cases for HMRC to investigate for this purpose. Tracy Gale said that HMRC would welcome the opportunity to be involved in this type of exercise.

6. Tax Credits Claimant Compliance Consultation Group (TCCCCG)

Cliff Sale said that he had written to representatives suggesting that, because of changes to the organisation of the Benefits and Credits organisation, HMRC did not feel there was a continuing need for a completely separate Consultation group looking at Compliance issues. He said that because of the reorganisation Compliance is now more part of everyday business, rather than being a separate entity. Cliff said that HMRC’s stance was therefore that Compliance issues should now be dealt with by the main Tax Credits Consultation Group and subgroups.

John Andrews said:

  • other parts of HMRC have separate groups considering Compliance issues and that it might not be useful if tax credits did not have a group to which issues could be brought
  • he has reservations about the demise of TCCCCG

John suggested that a Low Incomes Group be formed under Dave Hartnett’s Compliance group. HMRC said that they would look into this.

Tracy Gale said that it is the responsibility of her team to ensure that Compliance in tax credits is the same as the rest of HMRC.

Robin Williamson mentioned that rules governing tax inspector’s investigation visits had been updated in the last two Finance Acts, so things had moved on in that arena, but didn’t appear to have done so for tax credits. Suggestions such as gearing the size of a penalty to the size of the overpayment involved may need to be thought through in more depth, as this could mean that someone who has been careless may end up paying a higher percentage than someone who has been deliberately fraudulent.

Beth Lakhani asked whether it is possible to distinguish between Compliance and TCO. Cliff Sale said that Compliance activity still takes place but not as a separate entity. He said that Paul Gerrard wants to build a Compliance aspect into everything.

John Andrews said that there are still areas for customers to make mistakes on the campaigns side. He asked whether the campaigns aspect has now stopped. Cliff Sale said that there is a layered approach, from enabling customers through to the group who need a more traditional Compliance approach.

Tracy Gale suggested that a meeting be devoted to error and fraud and penalties. John Andrews said that this was the purpose of the sub-group. Tracy said that she would consider further the need for a sub-group.

7. Any other business

Victoria Todd said that there is no reference in the TC600 notes to backdating. Andrew Burland said that HMRC are still considering the issue of what customers are told about backdating.

Katie Lane asked HMRC to comment on the recently published overpayment statistics. Tracy Gale said there would be a Press Release issued shortly about this.

John Andrews said he hoped HMRC would approach the representatives earlier for their comments on new products in future, as reps had only been approached at a late stage about the recent WTC8 leaflet. Tracy Gale said that she was working to make sure that this happened in future.

John Andrews said that there was misleading information about tax credits on some other Governmental websites. HMRC said that this would be looked into.

The next meeting will be in July. Further details will be sent to the representatives.