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CPAG Tax Credits E-Bulletin May 2008
Dear Colleague,
Welcome to the May 2008 edition of CPAG’s tax credits e-bulletin keeping you up-to-date with tax credits news and developments.
Contents:
CPAG news and events
New and updated factsheets
Free trial – Welfare benefits and tax credits law online
Tax credits training in London
In-house training
Tax credits news
Overpayment statistics
Potential payments
New look Revenue website
Consultation on future of tax credits
Award notices
CPAG news and events
New and updated factsheets
The latest in our series of factsheets providing information for advisers on a wide range of tax credits topics are now in print.
- Tax credits and going back to work is a new factsheet looking at some of the issues for people who are starting work after a period of illness, unemployment, childcare or caring responsibilities.
- Tax credits overpayments has now been fully updated to take into account the new guidance, COP26.
Other factsheets have been updated from April 2008 and are available on the website – re-printed versions will shortly be sent out to everyone on our mailing list.To request printed copies of our latest factsheets please email acarr@cpagscotland.org.uk
Free trial - welfare benefits and tax credits law online
The online edition of the 'Welfare benefits and tax credits handbook' has been updated to cover the new ESA regulations and other important changes. The linked social security legislation is now up-to-date as of 2 May. If would like to see these updates for yourself (and are not yet a subscriber to the online service), you can get a 7-day free trial at
www.cpag.org.uk/online
Tax credits training in London
Forthcoming one-day training courses include:
Click here to book a place or for further details contact the training department on 020 7812 5228 / 5217 or email training@cpag.org.uk
Download 32 page A4 programme (200 KB PDF file) or email training@cpag.org.uk to request a printed version.
In-house training
Most of CPAG's existing courses can be provided 'in house' to meet the training needs of your group or organisation.
Providing a course 'in house' can be more cost effective - saving on time, travel and accommodation costs. We provide the expert tutor(s) and all the training materials. Please email training@cpag.org.uk or contact us on 020 7812 5228 / 5217 for more information.
Tax credits news
Overpayment statistics
The Revenue has released its latest statistics on overpayments. This is the first opportunity to see the impact of the increase in the income disregard from £2,500 to £25,000, which was introduced in April 2006. The total amount of tax credits overpayments in 2006-07 was £1 billion. This is a significant reduction on £1.7 billion in the preceding year. The number of claims with overpayments was 1.3 million, down from 1.9 million previously.
The full report can be viewed at www.hmrc.gov.uk/stats/personal-tax-credits/cwtc-quarterly-stats.htm - scroll down to ‘Finalised awards for entitlement years’ – supplement on payments. It is also possible to see how many people were overpaid and by how much for each local authority area in the country at www.hmrc.gov.uk/stats/personal-tax-credits/cwtc-geog-stats.htm
'Potential payments'
We have been contacted by advisers querying what is meant by ‘potential payments’ on award notices. Some revised award notices for 2007-08 show a ‘potential payment’ deducted from the amount to be paid to the claimant. This is a result of the change in the way underpayments are treated, as first reported in CPAG in Scotland's May 2007 e-bulletin, and explained further in the Revenue’s guidance. If a claimant has reported a drop in income during the year, the award can be adjusted according to an estimate of current year income. However, any amount the claimant may be owed from before they reported the change is held back to avoid an overpayment, and is shown as a potential payment.
At the end of the year, when the exact current year income is known and the final decision is made, there may be an underpayment or overpayment for the year. If there is an underpayment, the potential payment is issued in a lump sum. If the claimant has already received more tax credits than they were entitled to, the potential payment will be used to reduce the overpayment. The potential payment can be released before the final decision if the claimant makes a complaint which is upheld, or the underpayment was caused by official error.
New look Revenue website
The Revenue has launched a new version of its website information on tax credits at www.hmrc.gov.uk/taxcredits/index.htm with the intention of ‘making it easier to find out if tax credits can help you and your family’. Some of the main changes to look out for include:
- There is a new look version of the guidance on disputing overpayments COP26 although the content is the same as described in CPAG's February 2008 e-bulletin.
The form to dispute overpayments, TC846, was updated recently to refer to the new ‘balance of responsibilities’ test instead of the old ‘reasonable belief’ test. However, at the time of writing, the version on the website was still the old one dated 06/06. We understand the new version is sent out by the Helpline on request.
The Contact Us section does not include details on how to find your local enquiry centre for face to face enquiries. Tax enquiry centres around the country can still be tracked down on www.hmrc.gov.uk/enq/index.htm
The Disability Help Sheet TC956 mentioned in CPAG's April 2008 e-bulletin is incorporated into the notes to the claim form but is also available separately in the What’s New section.
Consultation on future of tax credits
The latest in a series of Treasury consultations into the future of tax credits has been published. Tax credits: improving delivery and choice summarises recent improvements and explores options for reforms. Proposals include:
- Claimants receiving Child Benefit and Child Tax Credit only have to report changes (such as a child leaving education or the birth of a new child) to the Revenue once. This is to be introduced from September 2008.
Introducing a system of income bands, where changes in income are rounded to the nearest £500, for example. This is open for discussion.
Recovery of tax credits overpayments through wages. This is to be trialled from April 2009.
Alternatives to the current childcare element such as payment directly to childcare providers or using a voucher system. This is open for discussion.
Annex C includes a list of questions and invites responses by 5 September 2008.
Award notices
CPAG in Scotland are collecting tax credit award notices for monitoring and training purposes. If you have seen any interesting or bizarre tax credit letters or award notices recently, please fax them, if the claimant gives permission, to Mark Willis on 0141 552 4404. Please ensure all names, addresses and national insurance numbers are blanked out to maintain confidentiality.
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