Minutes of the Tax Credits Consultation Group Meeting 16 May 2007

Attendees

HMRC

Nigel Jordan (Chairman)
Kevin O’Hanlon (Secretary)
Irenka Timlin
Andrew Burland
Chris Fox
David Skinner
James Snook
Anne Palmer
Nita Hart
Sarah Percy
Adrian Dixon
Claire Dolling
Simon Williams
Gio Marino
Gary Haythornthwaite
Mick Ney
Liz Welsh

HMT

Nick Burkitt
Kate O’Reilly

Adjudicator’s Office

Simon Oakes Jonathan Rodgers

DWP

Roger Pugh

Representatives

John Andrews - Low Incomes Tax Reform Group
Jane Hayball - Local Government Association
Frances Corrie - TaxAid
Sylvia Gilbert - Local Government
Andrea Bedell - Citizens Advice NI
Beth Lakhani - Child Poverty Action Group

Apologies

Fran Bennett - Joseph Rowntree Foundation
Richard Exell - TUC
Peter Gravestock - Association of Tax Technicians
Lindsay Isaacs - Citizens Advice Scotland
David Kinloch - Local Government
Katie Lane - CAB
Fran Robinson - Local Government
Kate Bell - One Parent Families
Robin Williamson - Low Incomes Tax Reform Group
Jane Moore - Institute of Chartered Accountants of England & Wales

1. Welcome and introductions

Nigel welcomed everyone to the meeting.

2. Minutes and action points of meeting of 7 March 2007

HMRC said that the minutes of the meeting held on 7 March would be finalised shortly, when comments received from representatives in the previous week had been considered.

Representatives raised the following points:

  • In future, could the draft minutes be sent to all representatives, not just those who had attended the meeting. HMRC agreed but said that they must not be circulated further in draft form.
  • HMRC had agreed to send a list of issues arising from meetings soon after each meeting. Representatives wanted that list as soon as possible after each meeting - HMRC apologised for the delay following the last meeting.
  • Updated information had been sent about complaints handling in TCO – representatives asked for confirmation that complaints could be made by telephone or fax as well as by post. HMRC said they would write to confirm the position, and the fax number.
  • The actions being taken to comply with Disability Equality measures introduced in any new forms – HMRC confirmed that that they would refer the representatives’ query and concerns to HMRC’s Customer Information team.
  • The Childcare calculator on the website had some mistakes in it – HMRC confirmed it was under review.
  • They would like information about how WTC will interact with the DWP’s Welfare Reform proposals, ideally for discussion at future meetings.
  • What advice was given to claimants, who called to renew their claims, about estimating income particularly where one of the couple has estimated income - HMRC said that they would check.
  • Their working hours query was still outstanding - HMRC confirmed they were still addressing this.
  • Representatives would like a summary of the issues arising from workshops with various advisers earlier in the year to be sent to them.

3. Update from Simon Oakes, Adjudicator’s Office

Since the discussions at the January meeting, Simon had shared with representatives a copy of the draft guidance on streamlining the process for TCO referral of tax credits complaints about overpayments at Tier 3 to the Adjudicator’s Office.

Representatives asked a number of detailed questions about the operation of the pilot, and the Adjudicator’s Office’s approach when reviewing complaints. They said that they valued the independence of the Adjudicator and had reservations about customer perception of their close working with TCO. Representatives remained unhappy about the lack of appeal rights against the recovery of tax credit overpayments.

Simon again extended an invitation for representatives to visit the Adjudicator’s Office and agreed to answer any further questions by email, if any arose after the meeting.

4. DWP update

Fast-track claims

The report on fast-track claims mentioned at the last meeting is still in draft in Jobcentre Plus; it does not cover Northern Ireland. Citizens Advice NI said that Northern Ireland also have problems with fast-tracking and suggested there should also be discussions with the Social Security Agency there. Representatives would like feedback and more information in due course.

Child Tax Credit awareness

Representatives had seen examples where Jobcentre Plus advisers do not always tell customers about claiming Child Tax Credit when it is appropriate for them to do so. DWP said they would look at the specific example to see what lessons could be learned.

Closer HMRC/DWP working

A paper by LITRG had been given wide circulation within both Departments and had been discussed at the HMRC and DWP liaison meeting on 15 May. Members of that liaison group will be looking at the details and will report back to that group.

A representative suggested HMRC should attend the Jobcentre Plus National Forum.

Representatives queried the liaison HMRC had had with DWP on the introduction of the 4 week run-on of WTC. HMRC confirmed they had consulted with DWP officials in the short time they had to introduce the new arrangements following the Budget announcement.

5. Notional entitlement

HMRC explained that notional entitlement arises where a claim has been made in the wrong capacity - typically where a single claim to tax credits is made which should have been a joint one with a partner. Where an incorrect claim is made in this way, any tax credits paid under that award are overpaid. Since May 2005 compliance officers could reduce the recoverable overpayment to reflect the amount of tax credits that would have been payable if the correct claim had been made. Although this practice became known as notional entitlement or notional off-setting it is a mis-description. There is no entitlement; HMRC simply remitted all, or part, of the overpayment in this way.

Representatives had suggested HMRC should apply a consistent approach and should therefore have a similar practice for overpayments in cases that did not arise from compliance activity - typically where a customer has not told HMRC that a partner has joined or left a household. HMRC felt that, although there is a similarity in the scenarios, a late report of a household change is not what the 2005 treatment was intended to cover.

HMRC had reviewed the position and, following discussions with interested parties, reported to representatives that the apparent inconsistency of approach could not continue - with immediate effect, the existing practice of notional entitlement will end. HMRC said that the Claimant Compliance manual will be amended from June. They confirmed that TCO and Helpline will have similar guidelines.

In summary, for any compliance case opened from 17 May 2007 notional entitlement will only be available in very exceptional circumstances – that is, where an incorrect claim was made out of a genuine error where the customer was muddled or confused. In addition, from 17 May 2007 it will be available where a customer contacts the TCO or a Contact/Enquiry Centre to say they made an incorrect claim as a result of a genuine error. Therefore it will be available to all cases involving genuine error whether worked by compliance or TCO. HMRC said that notional entitlement will not be available where there is a late notification of a change in circumstances.

Representatives were disappointed with the outcome. HMRC said that every case would be considered individually, taking the claimant’s particular circumstances into account.

6. Fast tracking

HMRC outlined the outcomes from a workshop with key stakeholders to identify improvements to the process for new fast track customers, which they are now considering. The intention is to encourage Jobcentre Plus advisers to identify more cases as fast track and ensure these are processed quickly through changing the process.

Representatives had the following suggestions for HMRC to consider:

  • identification of claims that should be fast tracked but which don’t come through the e-portal from Jobcentre Plus
  • identification of, and help for, people who should be claiming tax credits but are not
  • ensure the arrangements for Northern Ireland are adequately considered
  • compliance referrals should not unduly delay claims going into payment – what could representatives do to help resolve issues quickly?
  • HMRC should also consider the position for those claimants moving from Working Tax Credit to Income Support – if WTC is not stopped quickly, it can adversely affect the IS claim.

7. Operational updates

Contact Centres

Helpline availability remains very good. This is a busy time with the renewals period but Contact Centres are well prepared.

TCO

TCO reported that their workstate remains in a healthy position, with renewals clearance ahead of target and new disputed overpayments still being cleared within 4 weeks.

Debt Management

Representatives reminded HMRC that they had raised a number of queries about debt management in the previous week and added the following:

  • Clarification of the guidance on jointly and severally liable cases – to clarify for Representatives how decisions are made and what information they need to provide.
  • Concern at the financial effect on claimants who may be both paying back an overpayment on an earlier claim by direct payment, and seeing deductions from a continuing award.
  • Suspension of recovery during disputes – Representatives suggested that HMRC should wait for a short period before releasing the overpayment for recovery rather than doing that immediately once the disputed overpayment decision is made, and asked for confirmation under what circumstances recovery would be suspended if under dispute or where there is an appeal or complaint to the Ombudsman or Adjudicator.

Post meeting note: Collection of an overpayment will be suspended:

  • on receipt of an initial dispute
  • on receipt of an appeal
  • where a customer provides new information about the overpayment in response to a decision on an initial dispute, and asks us to review the position further
  • following a referral from the Adjudicator’s or Ombudsman’s offices where the complaint relates to an overpayment and provides further/new information about the overpayment which was not in the initial dispute.

8. Tax Credit Penalties

HMRC outlined their thinking on penalties for tax credits and invited representatives to send any comments by mid-June.

9. 4 week run on

HMRC said that the 4 week run-on regulations had been laid. Working Tax Credit will be treated as income for the purposes of Income Support and Jobseekers Allowance calculations. The amount of WTC for the 4 week run on will be shown in a letter sent to the claimant under the clerical process being used this year – it mirrors the amount of WTC they were entitled to immediately before the entitlement stopped, including any childcare element.

Representatives had a number of queries around the effect of the run-on, on ‘passported’ benefits. HMRC confirmed that

  • They understood that potentially claimants may not be eligible for Social Fund payments whilst they are receiving the 4-week run-on but do not feel there is a significant risk of this occurring. As with all forms of benefits affected by WTC, we are continuing to look at the issues but, in the meantime, if representatives have any concerns about specific cases then they can contact us directly.
  • Northern Ireland agencies will be involved in passporting discussions.
  • We are working with other Government Departments on the effect of the WTC run-on including the need new guidance about what they should do if claimants receive the 4 week run-on.
  • There had been discussions with Housing Benefit officials in Great Britain and similar discussions would be held with the equivalent authorities in Northern Ireland
  • The letter to customers tells them that they are entitled to the 4 week run-on, the amount they will get and the period for which it is paid. Customers will need to take this to their benefit office if they get Income Support, Jobseekers Allowance, and to their Local Authority if they receive Housing Benefit as the 4-week run-on payment would not be shown on their award notice.

Representatives asked if they could see a copy of the proposed letter.

10. Appeals

Representatives asked for information about the way appeals get to the Appeals Service.

HMRC said that initially they try to settle by agreement. If they cannot do this they will prepare a submission which they send to the Appeals Service, with a copy to the appellant. (If an “appeal” is clearly a disputed overpayment the claimant’s dispute will be passed on to the Disputed Overpayment team to take forward. HMRC said that they write to the customer to tell them what is happening and ask the customer to let them know if they really did want to lodge an appeal against the decision on entitlement. If it is not clear whether the customer wants to appeal, or dispute an overpayment, then it is treated as an appeal.)

Representatives asked that, if a customer wanted to have their appeal heard by a tribunal rather than settle by agreement could they do that? HMRC said claimants did not have to enter into discussions to settle an appeal by agreement, but tribunals might expect customers to try to settle differences before any formal hearing.

Representatives said that they had seen some examples of customers receiving letters asking them to withdraw their appeal without HMRC having addressed/answered all the points. HMRC said that this was not the aim or their understanding and asked representatives to provide them with examples for them to review.

HMRC confirmed that letters in response to appeals should have a name and telephone number shown. They asked representatives to provide examples if this does not happen.

11. Third party authorisation for tax credits and Child Benefit

HMRC said that an aligned process for tax credits and Child Benefit should be in place by the end of May; they will write to representatives with further information.

Representatives queried a reply they had received from HMRC about arrangements following separation of joint claimants. HMRC said that they will look at the issue again.

12. Working group updates

HMRC confirmed that they will set up a Working Group to look at migrant issues - an invitation will be issued to representatives.

Childcare: there had been a meeting on 19 April which discussed a number of policy questions raised by representatives. HMRC and Treasury officials took away a number of action points for follow-up and will report back to the Working Group in due course. A further meeting of the Working Group will be held as necessary.

CoP26: meeting to be held on 22 May 2007.

Passporting: meeting to be held in June.

HMRC confirmed that contributions to the Working Groups could be done by email, acknowledging it can be difficult for representatives from Northern Ireland to attend these meetings.

13. Change to Child Benefit on-line services

HMRC said that there will be a change to the existing on-line service at the end of June and the beginning of July while a format change is introduced.

14. Any other business

HMRC said that they would ask the Treasury to attend the next meeting to talk about the 3rd Money Laundering Directive if there was a desire for information.

HMRC said that the overpayment and underpayment statistics would be published on by National Statistics on 22 May 2007.

Representatives asked HMRC to send written replies to their queries regularly and, preferably, well in advance of the Consultation Group meetings. HMRC confirmed that replies can be shared with other members of their organisation unless they are marked as confidential.

Representatives said that they receive acknowledgements for appeals and complaints but not from other teams. HMRC said that it was not Departmental policy to acknowledge all correspondence but suggested Representatives could send examples to the secretary who will pass them to TCO to consider.

Representatives asked what was happening with DWP guidance about the Child Benefit Extension period. HMRC said that there is to be meeting about this and they will provide further feedback in due course.

Representatives asked for contact names and numbers for the Disputed Overpayments team so that they could speak direct to decision-makers on particular cases.

Representatives said that there have been occasions where TCO do not appear to have received registered post. HMRC asked them to provide some specific examples to enable them to investigate and see whether the post was delivered to TCO.

HMRC reminded representatives of the telephone number for the orderline for bulk orders of tax credits claim forms - 0845 366 7820 (fax 0845 9000 604).

HMRC said that the next meeting will be on 11 July at 100 Parliament Street, London.