Changes and developments since June 2005
Jump to
HMRC’s response to my June 2005 recommendations
Communication and accessibility
Complaints, appeals and disputed overpayments
HMRC’s response to my June 2005 recommendations
2.1 I consider first the action taken by HMRC in response to the recommendations I made in my June 2005 special report. I have set out those recommendations together with HMRC’s response to each of them in Appendix B. A number of those recommendations involved ensuring that customers were aware of the availability of interim manual payments, where a computer fault prevented payments; and of additional tax credit payments, where recovery of excess or overpayments greatly reduced ongoing payments; another related to putting an automatic restriction of the rate of recovery in certain circumstances. There were linked recommendations that HMRC should ensure that staff dealing with tax credit customers were alert to the availability of such payments so that they could invite claims from the relevant customers. All of those recommendations were aimed at helping to prevent hardship. It would appear that those have either been successfully implemented, or overtaken by subsequent improvements within the system (see Appendix B and paragraph 3.1). I welcome those improvements.
2.2 Three of my other recommendations related to giving people more helpful explanations about how overpayments had arisen, together with information about the circumstances in which recovery of overpayments could be waived. I am satisfied that HMRC have taken appropriate action to ensure that customers are made aware of the existence of COP 26 and of how they can challenge recovery of overpayments. There have also been improvements in the information given to customers about how their overpayment arose in the first place. This has not, however, been an area where HMRC’s performance has been consistent. The complaints referred to my Office have shown that some customers have continued to receive inadequate, confusing and sometimes even contradictory explanations for overpayments, which has made it difficult for them to challenge recovery. I note that HMRC have recently introduced a change to the system which should mean that from April 2007 it should be easier for customers to understand why an overpayment arose in the previous year (the ‘playback’ - see Appendix B, recommendation 8). Whilst I agree that this should be helpful, I am not convinced that it will entirely resolve the problem that faces some customers. My Office will therefore continue to look closely at the quality of the explanations given to customers in the complaints that we investigate.
2.3 The table in Appendix B shows that work is still under way in relation to three of my recommendations. Although the Government accepted in principle the case for a period of notice (a ‘pause’) before recovery of an overpayment began, regrettably, despite their efforts over a long period, HMRC so far have been unable, because of technical restrictions, to find a way successfully to introduce this. The aim of the pause was to give customers sufficient time to understand the reasons for an overpayment, the circumstances in which it might be waived and how they could make representations on the matter; for a proper, informed decision to then be taken on recovery; or simply for customers to have time to reorganise their household budget prior to recovery beginning. I was pleased that HMRC eventually found a way, from November 2005, to intervene manually and suspend recovery of an overpayment once the claimant disputed it, and that from November 2006 that became automatic. However, it remains my view (as I set out in paragraphs 5.13 to 5.17 of my 2005 report) that, as the decision whether or not to recover an overpayment is discretionary, it is fundamentally unfair, and therefore maladministrative, for recovery to begin in any case before the full facts of the case have been ascertained and considered under COP 26. I am therefore pleased to note that HMRC, despite the technical difficulties involved, are continuing to work towards implementing a pause in the future. I acknowledge that they are unable at present to give any indication of when that might be achievable, but in the light of its significance, my Office will continue to monitor HMRC’s progress in this regard. The fact that recovery of an overpayment only halts when the customer challenges it of course makes it all the more important that customers are given the appropriate tools to enable them to mount such a challenge, namely a full and clear explanation at the earliest opportunity of how the overpayment arose.
2.4 In June 2005 I also recommended that consideration be given to the adoption of a statutory test in relation to the recovery of an overpayment with a right of appeal to an independent tribunal (recommendation 11). I note that, in response, HMRC have said that they are considering an alternative approach which involves the Adjudicator providing a fast track independent review for disputed overpayments. They have said that they will be piloting that approach. I will, of course, be very interested to see the outcome of that pilot, and in particular whether customers consider the process to be effective and fair. However, given the relationship that the Adjudicator has with HMRC5, I find it difficult to see how this proposal could offer a reasonable alternative to an independent tribunal.
2.5 The third and final recommendation which HMRC have said that they will continue to work on relates to the general delivery of tax credits, and in particular the necessity of recognising the differing needs of some of their customers at different times, and responding appropriately to those (recommendation 12). I am satisfied that HMRC are seized of the need to continue to seek ways to improve the service they provide to, and hence the experience of, their tax credit customers, in particular the most vulnerable. I note also that, longer term, HMRC say that they will be looking more radically at the way they deliver tax credits as part of their Transformation Programme. In the meantime, my Office will continue to track their progress in this respect through the experience of the customers whose complaints we investigate.
2.6 In my June 2005 report, in addition to making the specific recommendations referred to above, I also highlighted in some detail some other key problem areas under the headings Processing errors and Communication and accessibility. I set out below my observations on progress in these areas.
Processing errors
2.7 My first report set out a range of processing errors that were affecting tax credit awards, often leading to interruptions in payments and to overpayments. As the processing of tax credits applications is wholly IT-based, it was not surprising that a number of these arose from technical problems within the computer system.
2.8 Since that report HMRC have released a number of IT software updates intended to fix some of those problems or provide ‘workaround’ solutions until a proper technical solution could be found. Regrettably, the complexity of the system is such that some of those technical ‘solutions’ have themselves created further problems (the October 2006 release, for example, led to payments wrongly ceasing following a change of circumstances in some 12,500 cases, which had to be corrected in the April 2007 release. Manual payments had to be made to those customers in the interim).
2.9 The number of cases affected by continuing system faults has, however, reduced significantly to around 38,000, and I understand that HMRC are continuing to seek system fixes for those remaining problems. HMRC also put in place improved arrangements for responding to those affected by such errors, which gave customers a single point of contact within the Tax Credits Office so that they could be dealt with by staff familiar with the case, and able to respond appropriately to queries and any new difficulties arising.
2.10 It follows that the number of complaints referred to me about such matters has fallen off (see Appendix A). However, we do still see cases where the support provided to customers in these circumstances has clearly been inadequate and has not taken account of their needs. Such instances appear, from the cases we have seen, to be individual staff failings, rather than indicative of systemic fault.
Case study: 1647
Mr H has learning disabilities and depends on support staff to help deal with his finances. In August 2003 he began a new job with earnings of £5,896. Due to a computer fault which continued for three years, he received a series of underpayments and overpayments, incorrect award notices, (including 15 non entitlement notices) had to accept manual payments rather than direct payments into his bank account, demands for non existent overpayments (including threats of legal action), and being told over the telephone that he was no longer entitled to tax credits. The stress and worry led to a breakdown in Mr H’s health and he was considering giving up his job due to the insecurity and stress caused by the uncertainty about his tax credits.
Even with the persistent efforts of the local Welfare Rights office, it took three years and the Ombudsman’s intervention for the problems finally to be resolved. HMRC agreed to ‘put a message on the notepad of Mr H’s award’ so that any staff who dealt with the case in future would be made aware that the system had in the past issued, and might still be issuing, incorrect notices and that, consequently, suitable checks should be made before any assumptions were made about his tax credit standing. A named member of staff had also been detailed to liaise with the Welfare Rights office representative over any future problems. HMRC also agreed to reimburse an underpayment of £883.22 during 2003/04, and to remit 2004/05 overpayments of £314.67 and 2005/06 overpayments of £3,614.89. They made a consolatory award of £190 for the worry and distress caused to Mr H and for the delay in complaint handling.
2.11 It is vitally important that HMRC staff do not underestimate the frustration that customers in this position can feel, particularly where several years after a system fault has been identified, HMRC are still telling them that the technical problem affecting their claim cannot yet be resolved, and that they are unable to say when it will be. Whilst that is undoubtedly an accurate reflection of the position, it is nevertheless important that staff recognise the very real irritation and distress that such messages can cause customers, and that they show appropriate understanding of that in their dealings with those customers.
Case study: 8869
We just want to know what we owe and end this matter, as it has gone on far too long …… we cannot deal with this matter anymore, my husband is on antidepressants, his new job is affected by all of this and we are about to separate because of the strain.
2.12 I also referred to the problem of ‘scanning’ errors; that is where the electronic scanning into the computer of information from the application form led to incorrect data being fed into the system. I have continued to see a significant number of cases where failure by customers to follow to the letter the completion instructions for the application form have meant that, even though they have provided HMRC with the correct information, their award has been incorrect; in this instance the ‘error’ is deemed to be theirs, rather than HMRC’s, when considering whether the resultant overpayment can be written off. Two key examples would be where customers have struck through a box as not applicable to them (such as whether they have a qualifying disability award), but the computer has read that as saying that they have completed the box, or where they have left boxes such as ‘earnings’ empty, but attached a letter explaining why they have done that or other evidence, such as a P60 form.
Case study: 25699
When Ms L and her partner applied for tax credits they assumed that the application procedure was similar to the previous benefit system of working family tax credit. They therefore enclosed with their application form, bank statements, P45s and wage slips. The computer scanned the application form and entered their income as nil. As a result they were overpaid by £2,828, which they were required to repay. The Ombudsman could not intervene because by enclosing those documents they had not followed the instructions on the application form, nor had they noticed the error in their award notice and notified HMRC.
Case study: 25001
Mr and Mrs T made a claim for tax credits in 2003. However, as English was not their first language (they are Croatian) they had difficulty completing the application form and omitted information such as their income. They were nevertheless aware that they needed to submit their income and so they enclosed their P60s with the application form. Shortly afterwards, HMRC returned the application form asking Mr and Mrs T to complete the form where an ‘X’ had been marked. They did so, but HMRC subsequently issued an award notice that showed their entitlement had been based on a nil income. They did not notice that and received an overpayment of just over £6,000 which they were unable to repay. HMRC then threatened them with court action if they failed to pay the debt. In their complaint to the Ombudsman, the Welfare Rights group representing them said ‘Their dealings with the Tax Credits Office have discouraged them from claiming further, even though they have been eligible, they very much fear that further claims would lead to further mistakes on the part of the TCO and subsequent demands for repayment’.
2.13 In such cases, unless the claimant checks their award statement carefully, such errors can go undetected for a considerable period of time and lead to huge overpayments that the individual then has to repay. Customers are often understandably upset that the fact that they provided correct information - albeit not in the format requested - is not taken into account. They also complain that they find it incomprehensible that they could have been assessed as, for example, working 40 hours a week but with no income, and they query why such an obvious error was not picked up by the Tax Credits Office staff. I raised the failure to have in place systems which would flag up such blatant errors and inconsistencies for human scrutiny as an issue in my last report. I understand from HMRC that they do now run automated checks against all claims to make sure that the information taken from the form is internally consistent, as well as consistent with other information held by HMRC. I am glad to hear that. However, as many of the complaints being referred to me still have their origins in errors that happened in the first two years of the new system, it is difficult for me to assess how effective those internal checks are in practice. HMRC have also pointed out to me that identifying ‘blatant’ discrepancies is not as straightforward a matter as it might seem. Using the same example as above, they pointed out that, as the tax credit application form asks the claimant for their previous year’s income and their current hours of work, it would be perfectly legitimate for someone to enter 40 working hours with no earnings if they had only recently started work. Whilst, therefore, I acknowledge that anomalies are perhaps not as easy to identify as they might initially appear, I hope that HMRC will continue to seek ways to improve their detection of them.
2.14 One area where there has undoubtedly been improvement is in the reduction in the number of human errors made in HMRC’s processing of claims. According to HMRC’s published figures, accuracy in processing and calculating awards rose from 78.6 per cent in 2003-04 to 97.7 per cent in 2005-06. One way in which this improvement has manifested itself in the complaints referred to me is in the reduction in the number of complaints that feature multiple award notices being sent to customers. Because of the way the IT system is designed, every alteration to an award, including each attempt to rectify an error, generates an award notice. The receipt of multiple (often incorrect) award notices was a source of huge confusion and frustration to many complainants in the first two years of the new system. I have seen relatively few such complaints relating to more recent tax years, which would support HMRC’s assessment that staff are making fewer input errors.
Communication and accessibility
2.15 In my first special report on tax credits I detailed the severe difficulties faced by customers during the early months of the new scheme first in trying to get through to the Helpline, and subsequently in getting a response to their query once the Helpline had logged their call. Those customers who sent letters, faxes and emails fared little better, and had to wait months to get replies, which in turn often failed to provide an adequate, or indeed any, explanation for what had happened in their case. In the meantime, frustrated with the delay and anxious about their position, the customers would often have made a complaint or appeal, or sometimes both, which led to large backlogs in those being dealt with as well.
Helpline
2.16 HMRC have told me that nearly 22 million calls were made to the Helpline in 2005-06, and 23.5 million in 2006-07. In 2006-07 the average time in which tax credit calls were answered was 27 seconds (including an 11 second message informing callers that their call was being recorded), compared to 58 seconds in 2005-06. HMRC said that over the last year the department had invested heavily in expanding their Contact Centre network, had focused strongly on quality and productivity improvements and had improved the tools available to staff to help them when dealing with customer queries. In 2006 they had increased the number of staff working on the Helpline by 1,300. The fact that my Office is now receiving far fewer complaints about the Helpline (see Appendix A), both about its accessibility and the quality of advice being given, suggests that HMRC’s investment in this area has led to an improvement in the service that they offer.
Award notices
2.17 In my last report I highlighted the very poor quality of the award notices sent to customers in the first two years of tax credits, commenting that they lacked information and were frequently unintelligible. I went on, however, to report that, following consultation with customer groups, very welcome changes were planned, which should help to improve matters. I am pleased to be able to say that those changes have been successfully implemented and very well received. Not only are the award notices much clearer, but they are now accompanied by a front sheet which clearly tells customers which details they must check and warns them of the potential consequence of not doing so (repayable overpayments). Customers have commented in their complaints to this Office on the significance of those improvements and how different their own situation would have been, had they had the benefit of such notices in previous years.
Complaints, appeals and disputed overpayments
2.18 In June 2005 I commented that there were extensive backlogs in the Tax Credits Office in dealing with complaints and disputed overpayments. In his evidence to the Public Administration Select Committee on 1 March 2007 the Chairman of HMRC explained that over the last 12 to 18 months HMRC had put in place what they saw as progressively better procedures for handling complaints. He said that the introduction of the concept of complaints caseworkers in the spring of 2006 had made a significant improvement. There was now a system in place for immediately acknowledging a complaint, and making contact with the person complaining and giving them a point of contact for the future. The aim was to do that within 48 hours. He added that they had also put significantly increased resources into dealing with the handling of disputed overpayments, where a large backlog had also built up. The Chairman added, ‘We are still in nothing like as good a position as we should be on tax credits complaints handling but I think that we have turned the corner and we now have in place better procedures, increased resourcing, which I hope is going to maintain that improvement’. HMRC have provided the tables below.
The number of FTE staff at all grades who are employed in the complaints teams is shown per quarter since January 2005 in the table below:
| Jan – Mar 05 | Apr – Jun 05 | Jul – Sep 05 | Oct – Dec 05 | Jan – Mar 06 | Apr – Jun 06 | Jul – Sep 06 | Oct – Dec 06 |
Staff numbers | 359 | 339 | 300 | 362 | 344 | 441 | 588 | 526 |
The number of FTE staff at A grades only (it is the A grades who process the overpayments)who are employed in the disputed overpayments teams is shown per quarter since January 2005 in the table below:
| Jan-Mar 05 | Apr – Jun 05 | Jul – Sep 05 | Oct – Dec 05 | Jan – Mar 06 | Apr – Jun 06 | Jul – Sep 06 | Oct – Dec 06 |
Staff numbers | 358 | 557 | 964 | 912 | 877 | 780 | 654 | 601 |
I recognise that some of the fluctuations in the numbers in the two tables above will be indicative of when staff were moved into or out of those areas to tackle particular backlogs of work. Nevertheless I was concerned that, if the staff reductions in both areas in October to December 2006 were indicative of HMRC’s intentions going forward, the progress made in complaint handling, as described by the Chairman above, might be lost. In response, HMRC said that they needed at all times to balance the need to deliver improving customer service and the need to provide that service in a cost effective way. The reductions in the numbers of staff in those two areas related directly to the reductions in the numbers of disputed overpayments and complaints being made, to the number of such cases awaiting attention, and to increases in productivity. They assured me that they would only reduce staffing numbers further if such considerations warranted such a step. I was pleased to hear that.
2.19 On the question of appeals, HMRC told my Office that around 23,000 appeals had been received in 2005-06. However, around 38% of those had included issues, such as disputed overpayments, where there was, in fact, no right of appeal. That would appear to suggest that customers were still at that point not being given clear enough information as to which matters were appealable. Certainly from the complaints referred to my Office it was evident that there remained some confusion on this point. HMRC have, however, told us that the more recent figures for 2006-07 suggest that staff are now being clearer in their communications with customers on this point (although they have been unable to provide us with those supporting figures).
2.20 In June 2005 many complaints which could and should have been dealt with by the Tax Credits Office were being referred to me simply because customers were unable to get any form of response from HMRC, either to their complaint, or on their disputed overpayment. However, as I have explained in the introduction to this report (see paragraphs 1.3 and 1.4), after HMRC fundamentally overhauled the way in which they handled complaints, and introduced a special streamlined procedure for a limited period of time in 2005 to reduce significantly the backlogs of disputed overpayments cases, I was satisfied that there were no longer severe delays in complaints to HMRC being investigated and resolved. I take the view that, wherever possible, complaints should be resolved by the body complained against through their own complaints processes. Accordingly, as from 1 April 2006, my Office agreed new arrangements with both the Tax Credits Office and the Adjudicator’s Office. Since that date we have investigated only those complaints that have exhausted HMRC’s complaints procedures; those that raise new issues which we feel need exploring; or where there are other issues making a referral to the Tax Credits Office or the Adjudicator’s Office inappropriate. All other cases where there appears to be some evidence of fault on HMRC’s part leading to an unremedied injustice to the individual have been referred back to those offices for investigation and resolution.
2.21 The fact that my Office is now receiving fewer complaints about the Tax Credits Office’s complaint handling (see Appendix A) suggests that these aspects of the administration of the system have improved, and that they now have better procedures in place. However, I would agree with the Chairman that they still have some considerable way to go before they reach the standard of complaint handling that should rightly be expected of them. I would therefore be more inclined to describe their progress as their having turned a corner, rather than the corner, as suggested by the Chairman (see paragraph 2.18).
2.22 Although the complaints process has been restructured, there is still some confusion (within the Tax Credits Office as well as on the part of customers) over what is a complaint, a dispute, or an appeal. There is also a lack of clarity about who is dealing with a complaint and what stage of the process it has reached.
Case study: 11257
Ms F complained that, despite receiving both working family tax credits (from 2001) and the child care element of working tax credits (from April 2003) to help finance the minding of her two severely disabled children by ‘assistants’ linked to a registered childminder, HMRC withdrew her entitlement to working tax credits in July 2005 claiming that this arrangement contravened tax credit regulations. HMRC also designated most of the working tax credits paid to Ms F since April 2003, amounting to nearly £13,000, as an ‘overpayment’ and began recovery from her remaining tax credits, thus causing her severe financial hardship. In a letter to HMRC she said 'You cannot realise what this is doing to me and my family, this has now been going on for nearly two years, the tax credit office have put me through hell just because I want to work, I have had to get childcare which they told me was registered so that I could have my two children who have severe disabilities looked after and what this has caused is that I’ve had to remortgage my house to pay to work, and we cannot afford to live.'
Ms F complained that, after submitting her initial appeal on 28 July 2005, the lack of response compelled her to submit a further eight appeal letters, none of which resulted in an appeal hearing being convened. HMRC said that one reason they had not actioned her appeal was because she had said in her appeal form ‘I am appealing against the overpayment for childcare for 2003-04, 2004-05’, thus implying that she was disputing her ‘overpayment’. It had therefore been decided to process her ‘appeal’ as if it were a ‘disputed overpayment’. That error was then compounded by HMRC’s failure to inform Ms F that they had made that decision, despite a steady stream of correspondence from her querying why, apparently, no one had processed her appeal. Moreover, after HMRC received a further request for an appeal in June 2006, an identical scenario ensued. Following an investigation by the Ombudsman, HMRC agreed to remit the ‘overpayments’ and pay Ms F a significant underpayment of tax credits. They also apologised and paid £150 to Ms F for the distress caused by their poor service, and agreed to review the way that they identify appeals as opposed to disputed overpayments.
2.23 In the light of that confusion, I am pleased to note that HMRC are proposing to merge the teams that deal with the first two stages of the complaints process and those that consider disputed overpayments, as that somewhat artificial separation has undoubtedly caused confusion and frustration for customers (with many believing that they have made a complaint, only to be told that it has been registered as a disputed overpayment). I understand that this welcome change is to be introduced over several months from October 2007 onwards.
2.24 There have been some improvements since 2005 in the written communications HMRC send to customers; the award notices (see paragraph 2.17) are a clear example of that. However, the complaints coming to me show that there is still much to be done to improve the quality of the information and explanations being sent to customers. That is particularly so in relation to the first stage of the Tax Credits Office complaints process, and to disputed overpayments. We frequently find evidence of the Tax Credits Office failing to provide a customer with a clear explanation of how an overpayment has arisen, or the reasons for the decision to recover it. We have also seen numerous examples of where customers have been given several different, and sometimes entirely inconsistent, reasons for an overpayment and/or its recovery. This failure by the Tax Credits Office to be fully open and accountable in their decision making makes it even more difficult for complainants to make an effective challenge, especially against the recovery of an overpayment. It is not, for example, sufficient for customers simply to be told, in response to their often lengthy and detailed representations as to why they did not believe that their payments were wrong, ‘We still believe that it was not reasonable for you to believe that your payments were right’. It is an important principle of good administration that public bodies give their customers clear reasons for their decisions.
2.25 The cases being referred to my Office also suggest that in some cases HMRC are still failing to take the opportunity to get their decision right first time by not considering all relevant evidence, particularly at the first point of contact; and that in those instances where they fail to do so they are not only acting unfairly, but they are clearly acting maladministratively. We have seen a number of cases, for example, where despite the fact that the claimant’s case for disputing the recovery of an overpayment rests on what they were told in a telephone call made to the Tax Credits Office, no effort is made to locate and listen to a recording of the telephone call in question. That failure appears to happen relatively frequently when the case is considered at the first tier of the complaints system. In a recent investigation, we discovered such a fundamental failure had not been identified either by the second tier complaint handlers or the Adjudicator’s Office.
Case study: 28004
Mrs J claimed tax credits as a single person with two children. In February 2005 she contacted HMRC to advise them that she had moved in with her partner and submitted a joint claim. HMRC said that a technical problem meant that, although they processed a new joint claim for Mrs J and her partner, they did not stop payments on her existing single claim. As a result, HMRC continued to make weekly payments of £100.92 to Mrs J for her single award, although they did not send out award notices relating to this award. Mrs J contacted HMRC on several occasions asking about the payments being made until September 2005, when she said that HMRC advised her that the overpayments that had been made to her would not be recovered as they were due to HMRC error. In October 2005 HMRC wrote to Mrs J to say that the overpayment on her 2004-05 award would not be recovered because it had arisen due to their error. However, in August 2006, some ten months later, Mrs J received a provisional tax credit statement saying that she had been overpaid by £2,298 in 2005-06, and that this would be recovered. She said that if she had to pay the money back she would 'be made bankrupt and more than likely lose our home…I wish I could convey the stress that we are going through'.
The Adjudicator found no grounds to ask HMRC to reconsider their decision that Mrs J should repay the overpayment for 2005-06, as she did not consider that the conditions of COP 26 had been met in her case, in other words that Mrs J could not have believed that the payment she was receiving was correct. However, neither the Adjudicator’s Office, nor the Tax Credits Office had listened to the telephone call in September 2005. When they did, following the Ombudsman’s intervention, they discovered that Mrs J had indeed been told, as she had contended, that she would not have to repay the sums involved. As a result, HMRC remitted the overpayment, apologised for failing to listen to the relevant call and paid Mrs J £100 in recognition of the worry and distress they had caused
2.26 Another example of where the Tax Credits Office’s decisions are not based on all the relevant facts is where they contend that the claimant should have known something from the award notice without the Tax Credits Office actually examining the award notice in question. Assumptions are made by staff, based on other cases they have seen, as to what the notice ‘would have said’ as opposed to what it actually did say in the case in question.
Case study: 9943
Mr and Mrs B have two small children and Mrs B is disabled. In November 2002 they completed their tax credit application form and informed HMRC that Mrs B was receiving a disability living allowance with both a lower rate care component and a higher rate mobility component. When they received their first tax credit award notice for 2003-04 it stated that ‘Mrs B… is disabled’. As Mrs B was registered disabled, and HMRC had not listed the criteria used to come to this conclusion, they assumed that the information held by HMRC was correct. However, when Mr and Mrs B renewed their details for 2004-05 through the Helpline, Mr B became aware that HMRC held incorrect details that his wife received the highest care component of disability living allowance. He immediately pointed out the error.
In August 2004 Mr and Mrs B were sent revised tax credit award notices which showed overpayments in both 2003-04 and 2004-05 amounting to £1,463. HMRC said that recovery would be made through reduction of their future tax credit payments. When Mr and Mrs B complained they were first told to complete an appeal form, which they did, then a form requesting reconsideration of the decision to recover the overpayments. Their request was refused on the grounds that they should have been aware of the error as the award notice had said that Mrs B was in receipt of the higher rate care component of disability living allowance. That decision was subsequently reviewed and upheld. Mr and Mrs B complained to the Ombudsman saying “This has caused us immense hardship, worry, upset and stress not only financially but also because of the length of time the Revenue have taken to make their decision”. Following the Ombudsman’s intervention in February 2006 HMRC finally accepted that there was no error in Mr and Mrs B’s award notice which they should have noticed. They waived the overpayment and made Mr and Mrs B a consolatory payment of £85.
2.27 Such examples clearly demonstrate that the Tax Credits Office still have a long way to go in some respects in improving their general approach to the handling of complaints and disputes. But what makes such failings of even greater concern is, of course, the devastating effect that decisions which are not taken in the light of all the relevant considerations can have on the customers involved, particularly on the more vulnerable. Nowhere is that more evident than in decisions relating to the recovery of overpayments.
5 The Adjudicator’s contracted role as the final tier of HMRC’s complaints process.
