Minutes of the Tax Credits Consultation Group meeting
on 17 January 2005

Attendees

Representatives:

Kate Bell (One Parent Families)
Katie Lane (Citizens Advice)
Anita Monteith (ICAEW)
Frances Robinson (Lancashire LG)
Joyce Humphrey (TaxAid)
David Stickland (Greenwich LG)
Robin Williamson (LITRG)
Lorna Reith (Disability Alliance)
Liz Lathwood (CIOT)
Pauline Hunter (Disability Alliance)
Jane Hayball (Greenwich LG)
Sarah Clarke (CPAG)
Peter Gravestock (ATT)
Andy Platt (NAWRA)

Inland Revenue:

Nigel Jordan (Chairman), Chris Fox, Vince Groome, David Skinner, Amy Connolly, Sarah Guy, Alison Dyer (Secretary)

Apologies for absence were received from Nick Chaplin (IR), James Wolfe (DWP) and Richard Exell (TUC).

Contents

1. Matters arising from the minutes of the meeting on 3 November

Two representatives made comments on the minutes. A final agreed version will be issued.

A representative asked about the advisers’ guide to the award notice. Vince Groome said priority was being given to the work on the award notice and work on the guide will be taken forward in February.

Full time education

Claims show a child’s date of birth and the default on the computer system is for payments to stop on 1 September following the child’s 16th birthday to avoid an overpayment. This is set out in the notes that go with the claim form and award notice. This year the IR are reminding those whose children are approaching 16 of the need to tell them if a young person they are responsible for stays in full-time education beyond 1 September following their 16th birthday. When the IR are told the child is continuing in full-time non-advanced education, payments will be made until the child reaches the age of 19, unless the claimant notifies the IR that the young person ceases full-time education in the meantime. The onus is on the claimant to tell the IR of any change and any delay in notifying may result in a recoverable overpayment. The claimant cannot notify the IR that a young person is ceasing full-time education in advance, as this would be based on expectation, rather than fact. The renewal form is largely retrospective and there is nothing to fill in on this point. Claimants should call the Helpline to report any changes, but Vince will check the wording of the form.

The plan is to issue targeted letters in September which will be firmed up nearer the time.

One representative suggested a reminder be included on the Child Benefit notice. This is being looked at. Vince said the IR would consider making a more prominent reference in the Child Benefit material. In addition, some representatives asked if this could be given higher prominence in the Guidance Notes. However, what needs to be brought to the attention of one claimant can be of little interest to another (for example, those on WTC with no children).

Better off calculations

In the absence of James Wolfe (DWP) this item will be carried forward. Chris Fox said she would contact IR Analysis and Research to check on some work that has already been done within the Department.

Post meeting note: James Wolfe has said he has given feedback on representatives’ concerns to the better off calculator development team in DWP.

Online calculator

Analysis and Research are considering producing a CD Rom to deal with the issues arising from claimants trying to decide whether child care vouchers or cash from their employers. It is hoped this will deal with in-year income changes.

Pension Credit/WTC – policy intentions

The IR said that, if required and subject to Ministers’ agreement, the transitional order will need to be changed to achieve the policy intention that those in receipt of Pension Credit have eligibility to full WTC.

It was also mentioned that a real case, where the circularity problem that arises from the current law is pertinent, has been forwarded to David Skinner by LITRG.

Post meeting note: Since the meeting, the IR have looked into the specific case and the likelihood of Pension Credit recipients being caught in any circularity. The IR’s view is that they do not think it is a problem, either in terms of numbers or likelihood of occurrence, which requires a legislative solution. David Skinner will be writing to the Group before the meeting on 11 May setting out the IR’s thinking.

Milk tokens

Vince Groome said that when the four-weekly scan is done for the Department of Health (DoH), a number of cases – for example, claims processed within the preceding few days - are excluded each time. The IR are in discussion with their IT suppliers and the DoH to see if a more frequent scan can be carried out. DoH are also reviewing their procedures covering the time from pregnancy to birth. One representative asked if there were any figures for the numbers excluded. Vince said he was not aware there was a big problem, but will check. He will also check the Helpline call process.

Discretionary Housing Benefit

In the absence of James Wolfe this item will be carried forward.

Post meeting update received from James Wolfe: The position remains the same as set out at previous meetings. The best estimate is that fewer than 200 families nationwide are in a position where they see a small net reduction in their financial support when they float off benefit due to the interaction of Council Tax Benefit (CTB). These are typically families who have been able to retain their 'passport' to maximum CTB on an income of about £30 per week more than families in rented accommodation, due to their entitlement to help with mortgage interest costs. DWP recognise this may be difficult for families used to budgeting on a particular weekly income and have reminded Local Authorities of their powers to consider an award of a discretionary housing payment, where appropriate.

Intermediaries/agents

Representatives wanted to know if the Tax Credit Office are, in practice, accepting faxes from agents in urgent cases. Amy Connolly will check the process will work should such a case arise.

Post meeting note: At present the team at the Tax Credit Office that handles urgent faxed authorities on form TC689 are not receiving any from agents. The issue as to how to handle a registration/distribution of the number to agents is being taken forward with a view to resolution before the next meeting.

IS/JSA Migration

A representative asked what the latest position is on the migration. The IR said no specific date has been set, but it is likely to start in summer 2005 on a phased basis and be completed by April 2006. The number of cases is likely to be less than 900,000.

Website review

Chris Fox handed out a mock-up of what the tax credits website front page might look like. She said all forms etc would be in both pdf and html formats. She asked for views. Suggestions included:

  • Repeating 'What’s new?' on the main IR front page
  • Adding changes of circumstances to the main 'Tax Credits' list
  • Expanding the heading 'Leaflets and Forms' to include guidance notes
  • Having an index for Tax Credits Bulletins, with topic headings
  • Changing the heading 'Guidance and Legislation' to 'Manuals and Legislation'
  • Links to and from the practitioner and employer zones.

Having consolidated legislation on the site is likely to be a longer term matter. Representatives asked to have a copy of the three drop down menus.

2. Feedback from a small scale exploratory research study of overpayments amongst tax credits claimants

Sarah Guy (IR Analysis and Research) handed out details of the key findings of research carried out by Opinion Leader Research to help the IR better understand why claimants built up overpayments in 2003/04. She said the Paymaster General had not yet seen the findings and asked the Group to treat this as confidential.

Sarah said that the IR were considering whether further research would be carried out with the aim of encouraging claimants to report changes of circumstances during the year. This would include sending out better targeted letters (including details of the claimant’s case and their income). The timetable for this would be tight – it was hoped to draft letters this week and issue them in February. Representatives were concerned about the timing of this. They felt it was not a good idea to encourage people to report changes of circumstances so close to the end of the year as this could wipe out their tax credits for the rest of the year.

Representatives asked whether the IR had explored what people had read about tax credits. They said they had not, but the Tax Credits Update newsletters had been read by a large majority of claimants.

One representative asked if any research had been done on overpayments due to Official Error, as people needed to be confident the system works. The IR said more analysis of these cases was needed, but they would look at what can be learned from the first year of operation. Representatives thought the Tax Credits Updates were more effective in getting messages across – points to be addressed include tapers and ensuring people are aware that even if they report changes immediately, they could still have an overpayment. They pointed out that self-employed do not know their income on a weekly basis or until the end of the year.

Sarah said she would send the draft letters to Group members and would welcome comments.

Post meeting note: In the light of comments made by representatives about the timing of letters, the IR have reconsidered this further research and the scope of the project and decided to postpone this for now. They will keep the Group informed about it.

3. Issues Log

Nigel Jordan said he had just received feedback on the Issues Log from the Tax Credits Co-ordinating Group (TCCOG), together with a paper proposing various solutions to problems with overpayments, via Robin Williamson and would be happy to consider his comments. He said he would assume ownership of the Log and responsibility for views being fed back to Ministers.

Where Robin had indicated items on the Log should not be classed as “closed”, it was suggested a different term be used, perhaps “addressed” (as used by the Employers Group), which would indicate that a change had been made and the position was being monitored.

A revised version of the Log will be issued before the next meeting, if possible by mid-February.

4. Overpayments

Representatives felt the default for people to pay back overpayments should be 12 months, rather than 30 days and said they have heard of people being told by IRECs to take out loans to pay off overpayments. Page 6 of COP 26 confirms that claimants who have no continuing award can choose to pay back an overpayment over 12 months. The IR will give an update on this point and wrong advice being given to take out loans at the next meeting. If representatives can provide details of offices that have provided this advice, they should pass them on to the secretary.

One representative was concerned about the in-year recovery rates for people receiving the maximum CTC who are on IS/JSA. Representatives were concerned that in some cases people were only getting 81% of their tax credits when there is an in-year recovery as well as a cross-year recovery. They said they were sure this could not reflect Ministers’ intentions. Representatives believed it appeared to go against the Government’s policy of reducing child poverty. The IR said that their views will be passed on to Ministers.

One representative said she had seen standard letters in which the IR had acknowledged they had made a mistake and asked how many of these letters had been issued. The IR were not sure which letters were being referred to and Nigel Jordan asked to see a copy.

Post meeting note: In April and May 2003 a software error caused the computer system to issue incorrect payments which resulted in overpayments being made to 455,000 households, amounting to £94 million. The IR have written off overpayments that were less than £300 and affected 373,000 households (worth £37 million). They are asking for larger amounts (amounting to £57 million) that were received by 82,000 households to be repaid. The letters relate to the 82,000 cases where the IR have added the extra payments to the claimant’s record for 2003/04.

Representatives asked about the quality of decisions in Official Error cases as the numbers of overpayments written off (according to answers to Parliamentary Questions) seemed very small. The IR said they consider each case on an individual basis and look closely at what has happened. The National Audit Office would look at the consistency and fairness of decisions, but first Internal Audit would be likely to review them.

The IR confirmed there would be a need to revise COP26 for the 2005-06 tax year.

5. Appeals

The IR explained that if they receive an appeals form or a letter about/purporting to be an appeal it is referred to their Appeals Team at the Tax Credit Office. If they then establish the letter is disputing the recovery of an overpayment, it is referred to the Disputed Overpayments Team (DOT) to deal with and does not count in the appeals statistics (as appeals can only be made against entitlement). Wherever possible, cases are settled by agreement between the IR and the complainant, but representatives were concerned that the number of cases referred to the Appeals Service is very small compared to DWP cases. Representatives asked how many cases are settled in the claimant’s favour and what the reasons for appeals were. The IR said that they did not see the process as adversarial, the idea being that both parties agree the outcome/settlement, and that they would check what qualitative information they hold. They said that they do analyse the cases settled to learn lessons, to identify any trends and avoid the same mistakes happening in the future. The IR will give an update on this at the next meeting.

6. Helpline

The IR Helpline have updated their guidance on the income that is to be included or disregarded for tax credits purposes.

Nigel Jordan informed the Group that the Liverpool Helpline is being transferred to become part of the Tax Credit Office. This involves about 130 staff who will be given additional training to give them the knowledge to handle more complex calls that are outside the remit of the Helpline. Details of the structure are still being worked on – the main aim is to improve customer service.

Representatives had heard of problems with the Helpline advice being given on self-employed people’s income being returned to the accounting date, Gift Aid and pensions. The IR said they would look at the Helpline scripts on Gift Aid and pensions and also the Tsunami Gift Aid message on the website (and whether it could be linked to tax credits).

Jane Hayball said she had a case where a child’s date of birth had been correctly shown on the claim form, but the computer system had an earlier date and the claimant had been advised to make a new claim. The IR said that if she provided the claimant’s NINO they would arrange for the case to be looked at.

7. IREC staff

On the service provided by IREC staff the IR said they receive a range of training, both about tax credits themselves and the IT system. They also have extensive online guidance. Telephone support is available to IREC staff to help them deal with more complex enquiries from customers. Quality monitoring checks are carried out. Local offices deal with millions of callers at their offices every year and the IR acknowledged that there will always be times when the quality of advice given is not as good as they would wish. The IR would welcome feedback (via the secretary) on any specific aspects that may be giving rise to inconsistencies.

8. Backdating of tax credits claims

New claims for CTC are automatically backdated (by default) to the earliest effective date (up to a maximum of three months prior to the date the claim is received). To avoid an overlap of payments, the computer system checks the last effective date for IS/JSA and Pension Credit. Staff in Jobcentre Plus offices are trained to accept claims and send them using the e-portal. The Tax Credit Office are alerted to claims, so they can be backdated. The DWP representative will be asked to outline DWP’s activity at the next meeting.

Claims for WTC are not automatically backdated, but they are backdated if the claimant requests it. There can be slight gaps between the date of receipt of claims at IRECs and processing. Where gaps are identified, giros are issued. Vince Groome will give an update at the next meeting on the gaps issue and outline the process, including that of the Helpline. The IR will also check whether any changes can be made to the claim form, but it depends on other competing priorities. There should also be an FAQ on backdating on the website.

One representative asked how the system coped with the fact that backdated CTC might thereby entitle a claimant to WTC (a claimant with a child only had to work 16 hours, not 30, or be aged 16, rather than aged 25). The IR agreed to look into this also and report back.

9. Claims where young people receive incapacity benefit

One representative was concerned about payments of tax credits to parents for young people in receipt of Incapacity Benefit, having seen a case where a claimant was told she had an overpayment after the end of the year and the IR had started to recover the money from her CTC for her other child, leaving her with no CTC, even though she was on Income Support. The IR said the general rule is that claimants should tell them if a child starts to receive a Social Security benefit in their own right. From 6 April 2004, a claimant making a new claim for CTC cannot claim for a young person who is receiving Incapacity Benefit in his or her own right. However, on notification of Incapacity Benefit (IB) being received, transitional protection should be considered and, if transitional protection applies, CTC can continue to be paid for a period. In some cases it appears that transitional protection has not been considered when claimants have returned their renewals declaration showing a young person is receiving IB and any provisional payments that have been made are treated as an overpayment, whereas payments have been made correctly and there is not an overpayment. The IR said they were about to carry out a scan to identify cases that need to be considered, so they can ensure they are treated correctly. The outcome of the scan will be reported at the next meeting.

10. Local liaison arrangements

Andy Platt said there had been problems liaising with the IR in the Leicester area. Welfare Rights Groups wanted to arrange discussions with the IR, but had only been offered presentations at which presenters did not have the knowledge to answer all the tax credits questions that were raised. He said there is 6-monthly liaison with DWP. The IR said they have local Customer Relations Managers (CRMs) whose names are published on the website. Previously local liaison arrangements have worked well, with questions for answer being submitted to the IR in advance. Amy Connolly said she would contact the CRM for Leicester.

Post meeting note: Staff from the Tax Credit Office attended a liaison event at Leicester town hall on 27 January. More generally, where advisers want to arrange local liaison meetings, they should, in the first instance, discuss this with the local CRM, who is able to refer to the Tax Credit Office for advice, assistance and any materials they may need. If a CRM identifies a need for the Tax Credit Office’s External Relations Team to attend a local event to answer questions, give a presentation or provide training, they are able to contact that team and the request will be considered and a solution arrived at. Any problems on this should be referred to the secretary who will pass all or most on to Amy Connolly.

11. Freedom of information

Nigel Jordan said requests for information under Freedom of Information are being received. The Group’s “Rules of Confidentiality” state that minutes of meetings are available for use within the organisations represented, but that they should not be circulated more widely or quoted publicly without the IR’s agreement. One representative still had a comment to make on the rules.

12. Take-up of tax credits

Nick Chaplin was unable to attend the meeting, so the IR said they would reply to the queries raised, by e-mail.

13. Proposal to co-ordinate meetings with the compliance consultation group

The next meeting of the Compliance Consultation Group is on 25 January. Phillippa Williamson (head of tax credits compliance at the Tax Credit Office) now chairs this group. After their January meeting the Compliance Group will meet on the same days as the main Consultation Group. The next meeting on 16 March will start at 10.00am (at 22 Kingsway), but the timing of meetings will be kept under review.

Nigel Jordan told the Group that Nick Lodge (Director of the Tax Credits Programme) would shortly be moving to a new post. Also, Sarah Walker has replaced Tony Orhnial as Director of Revenue Policy (Personal Tax) and Tracy Gale has taken over from Sue Walton as Assistant Director for tax credits policy.

14. Any other business

Kate Bell asked whether there was any procedure for checking the existence of a child when couples split up. Cases had arisen where one partner had claimed, but they were NOT the primary carer and were not getting Child Benefit for the child. Nigel Jordan said he appreciated the underlying problem which Kate had raised by e-mail. He said it should no longer occur as the IR’s IT process had been changed recently.

Robin Williamson asked about the service standard statistics for the Tax Credit Office which were promised for OCC. Chris Fox said she would look into this.

As mentioned above, the next meeting will be on Wednesday 16 March 2005, starting at 10.00am, in the Conference Room, 3rd Floor, 22 Kingsway, London WC2.