Minutes of the Tax Credits Consultation Group Meeting 17 July 2007

Attendees

HMRC

Nigel Jordan (Chairman)

Kevin O'Hanlon (Secretary)

Dawn Fisher

James Snook

Andrew Burland

Chris Fox

Daphne Hooper

Roberto Specos

Ann Walker

Simon Habesch

David Skinner

Jonathan Langridge

Irene O'Brien

Les Searle

HMT

Nick Burkitt

Lucy French

DWP

Phil Corbett

Representatives

Kate Bell - One Parent Families

Robin Williamson - Low Incomes Tax Reform Group

Jane Moore - Institute of Chartered Accountants of England & Wales

Jane Hayball - Local Government Association

Sylvia Gilbert - Local Government Association

Frances Corrie - TaxAid

Beth Lakhani - Child Poverty Action Group

John Andrews - Low Incomes Tax Reform Group

Lucy Cochrane - Citizens Advice (NI)

Katie Lane - Citizens Advice

Apologies

Andrea Bedell - Citizens Advice (NI)

Richard Exell - TUC

Peter - Gravestock Association of Tax Technicians

Lindsay Isaacs - Citizens Advice (Scotland)

Fran Robinson - Local Government Association

1. Welcome and introductions

Nigel welcomed everyone to the meeting.

2. Minutes and action points of meeting held on 16 May 2007

Representatives made the following points:

  • They thought the notes should reflect the circumstances in which overpayments would be suspended. HMRC said that they would clarify this point.
  • Could HMRC try to find a way to expedite fast track cases where there are compliance issues. HMRC said they are aiming to carry-out initial Compliance checks as quickly as possible. However, the process may take longer where they need to make enquiries.
  • Whether, in fast track cases, information is checked again following a new claim after a separation has occurred. HMRC said that the computer programming carries out an initial risk assessment and then it is the responsibility of compliance staff to decide whether to ask for further information.
  • If a person on Income Support moves from being part of a couple to a single claimant do they need to make a fresh claim for tax credits. HMRC said that they will need to make a new claim in their own capacity.
  • Whether the DWP guidance about the Child Benefit extension period will be updated. The DWP representative at the meeting confirmed that further guidance is to be produced, and representatives asked to be informed when that happened. Representatives were unhappy with the amount of time that had passed since they raised this issue, and were advised who they could refer to in DWP.
  • Whether there are plans to harmonise the rules for Child Tax Credit and Child Benefit. HMRC said that this is a decision for Parliament. HMRC said that they would like to join-up customer service where that would improve delivery to the customer, but the policies would be kept separate.

3. Representative outstanding issues

  • Representatives had seen some instances of overpayments where manual payments were posted against incorrect years. HMRC said IT functionality allows these payments to be moved to the correct year. They asked representatives to send them details of any instances where this does not appear to have happened. HMRC confirmed that there were approximately 18,000 customers in receipt of manual payments in March 2007.
  • Representatives queried whether overpayments arise when customers who had been getting manual payments are returned to automatic payments. HMRC said that improvements to the processes meant that overpayments should not normally arise in such instances. HMRC said that there is an explanation on the letter sent to customers getting manual payments to point out that it is possible that those payments might be duplicated when automatic payments are set up. HMRC confirmed that the team who arrange manual payment should note the customer's record that they are receiving manual payments.
  • In-year adjustments. HMRC said that in-year recovery of overpayments now works automatically in the same way as cross-year recovery.
  • Working hours. HMRC acknowledged that they have an outstanding action point in this area, and said they would respond to representatives as soon as possible. Representatives were concerned that some customers would not fully appreciate whether they should report changes. HMRC confirmed the entitlement rules were the same as before. They felt that a strict definition would possibly make things more difficult for customers, with an onus to report every week. And discussions at earlier meetings had rejected the idea of averaging as too complex. HMRC undertook to clarify the position as much as possible in the information for the website.
  • Representatives said that they thought HMRC should only enforce the one-month notification period for changes of circumstances once all their literature was correct. HMRC confirmed that their leaflets had been updated. Helpline guidance, and information sent direct to customers with each award notice, or in their renewals packs, all correctly referred to the one-month period.
  • Disability equality. Representatives said that there is a public duty for HMRC to ensure that their literature is up-to-date. HMRC said that their Disability Champion is looking to see what needs to be done and by when, but pointed out that this is an HMRC-wide issue (not just tax credits). In the meantime revised, up-to-date & technically accurate leaflets would go on the website shortly.
  • 0800 numbers. Representatives asked what progress there had been with the consideration of any move to 0800 numbers. They said that people with pay-as-you-go phones have to pay to call 0800 numbers. Even publishing geographical numbers was a way of reducing customer costs.
  • Direct recovery of overpayments. Representatives thanked HMRC for their summary of the processes. They would also like information about:
    • recovery in hardship cases.
    • the time-to-pay arrangements where a customer is also seeing an adjustment from a continuing award. HMRC said that they look at the customer's circumstances and their ability to repay when dealing with any overpayment.
    • whether DMB staff can see there is a TC689 for a representative who has been authorised by a customer to act on their behalf. HMRC said that DMB staff can see that there is a TC689 when it is recorded in the household notes.
    • whether home visits are routine to assess ability to repay. HMRC said that they are not. Home visits are made to engage with people who have previously not responded to HMRC queries.

Representatives suggested that it could be helpful to have a separate discussion about debt management issues.

4. Operational positions

TCO

  • HMRC reported that the workstate is steady, renewals are on course, and new disputed overpayments were generally being dealt with within 4 weeks of receipt.

Representatives asked about:

  • the numbers of people who still had to renew. HMRC said that the Helpline is busy, and the number of renewals left to be done was reducing on a daily basis. They would not have any figures for the number of cases where payments were stopped until that activity was carried out after the renewals deadline of 31 July.
  • what steps HMRC take around renewal if a previous letter has been returned because the customer is no longer at the recorded address. HMRC said that payments should have already stopped on these cases if previous correspondence has been returned undelivered.
  • the average processing time of a claim. HMRC said their targets are clear - to deal with 86% of claims in 5 working days and 95% of claims in 30 working days from the date of receipt. Claim forms are scanned on receipt as part of the process. Delays can occur if there are attachments sent in with the claim form, so the advice is not to send attachments where possible – HMRC will ask to see any documentation they need.

Contact Centres

HMRC said that this is the busiest time of the year, and that call volumes had been high so staff had been utilised from other Contact Centres to answer tax credits calls. HMRC confirmed that calls were still recorded.

5. Debt Management Consultation Document – Review of Powers, Deterrents and Safeguards: Payments, Repayments and Debt

HMRC said that they had recently issued a consultation document about the payment and repayment of debt. HMRC said that comments were invited by 17 September.

HMRC said that they want to help those who want to pay and can, and to come down firmly on those who refuse to pay. Representatives commented on a number of areas in the Consultation Document which could impact on tax credits.

HMRC thanked representatives for their initial comments and said that they would welcome detailed views from them.

6. Welfare Reform

HMRC said that they would be considering the impact of the Welfare Reform Act, and what consequential amendments would be needed to the tax credits legislation/regulations as a result of it. When they have completed that work, they will discuss further with representatives at a future meeting.

  • Representatives made the following points:
    There may be issues with the introduction of the Employment Support Allowance where people have previously been on Incapacity Benefit
  • Whether people will need to choose between the £86 disregard on ESA and Working Tax Credit.

HMRC asked that any further comments be sent via the secretary.

7. Reasonable belief test

HMRC said that they would like to consult about the description of the reasonable belief test in COP26, and will be arranging a meeting in the near future to discuss this.

8. DWP/HMRC Joint Working Programme - feedback on joint working

HMRC provided some feedback about the pilot carried-out with the aim of improving customer service through joining-up the service provided to customers by HMRC, DWP and local authorities. The trial involved customers moving in and out of work and it ran from October 2006 to February 2007. The overall result of the trial was an improved service to customers (achieved by working jointly across the three organisations), including, for example:

  • tax credits turned on more quickly when someone took up work
  • tax credits turned off the same day as someone claimed JSA
  • improved the time taken for benefits to come into payment
  • incentives to take up work
  • 56% of repeat customers had noticed an improvement.

HMRC said that it was intended to set up a further trial involving 6 councils which will test joint working in a number of environments.

HMRC said that they would report further details about the pilot at future meetings.

9. Third Money Laundering Directive

Lucy French from Her Majesty’s Treasury attended the meeting to discuss the Third Money Laundering Directive – an EU Directive to prevent money laundering and prevent support of terrorism.

Representatives had reviewed the consultation document and draft regulations, and were concerned with the use of generic words such as ‘business’, as some of their organisations could be described as a business. They said it is important that the rules make exemptions clear – they did not believe that charitable, not-for-profit, organisations which give advice for no payment to customers should be caught by these regulations.

Lucy said that she was happy for representatives to see the draft guidance and to write-in with comments. HMRC said that it was appropriate for representatives to send comments directly to Lucy.

10. Any other business

Representatives asked whether there are any special provisions for tax credits customers who had been affected by the recent flooding, as documents and personal records may have been lost. HMRC said that they normally take a sympathetic approach whenever customers were affected by such issues, and would look into this and report back.

Representatives asked whether they could have direct contact with the Disputed Overpayments team. HMRC said that they would consider the position.

Representatives said that the Child Maintenance Bill will require HMRC to provide income information for the department which will replace the CSA, and asked whether TCO will play any part in this. HMRC said that they did not know at this stage, but would check and report back.

HMRC confirmed that the DWP portal had closed the previous week and that DWP staff had reverted to using paper-based methods of passing-on information. The portal would be closed indefinitely but should not have any adverse effect on customers.

Representatives said that they were still awaiting feedback from the high level technical workshop.

Representatives said that some tax offices were not accepting claim forms. HMRC asked representatives to pass details of any office not accepting a claim form and they would look into it.

HMRC said that the next meeting would take place on Wednesday 26 September, and not 19 September as had been advised at the beginning of the year. The meeting will be held in 100 Parliament Street