Statistics and take-up rates

The Revenue recently published statistics for tax credits claims in payment in April 2009 and take-up rates for child tax credit (CTC) and working tax credit (WTC) in 2006-07.

• £1 billion in tax credits was overpaid in 2007-08
• £798 million in tax credits was underpaid in 2007-08
• There are 5.46 million CTC claims in payment (including combined CTC and WTC)
• There are 215,900 families still getting IS/JSA for their children
• The estimated take-up rate for CTC (including combined CTC and WTC) is 81% of eligible claimants in 2006-07
• The estimated take-up rate for WTC (including combined CTC and WTC) is 57% of eligible claimants in 2006-07
• The CTC take-up rate for families with children is 84% of eligible claimants
• The WTC take-up rate for claimants without children is 20%

• View the statistics in full

Overpayments and household breakdown

The minutes of the Tax Credits Consultation Group meetings between the Revenue and voluntary organisations are available on the Revenue’s website. In the latest meeting on 11 March 2009, David Skinner of the Revenue’s Benefits and Credits Group confirmed the following:

• Following a household break up, the Revenue would advise customers that it is seeking no more than 50 per cent recovery of any overpayment from each, and that they would not be asked to pay back any more where the other partner is unable to pay their share of the debt or where the Revenue cannot trace the whereabouts of the other partner.
• The Financial Secretary to the Treasury was actively considering the notional entitlement issue, and the Revenue would report back any further developments on this to representatives.

The first point relates to an overpayment on a couple claim, where both members of a couple are by law jointly and severally liable. If the couple breaks up and one partner cannot be traced, the Revenue has previously asked the other partner to pay the whole amount. This often worked against the partner with children, who is still getting CTC and therefore easier to trace.

In the second point, notional entitlement is where someone has been overpaid tax credits but would have been entitled if they had claimed correctly. For example, the undeclared presence of a partner with no income results in an overpayment on a single CTC claim but they would have been entitled to the same amount as a couple. The Revenue’s guidance on when an overpayment would be reduced to take this into account is restricted to cases of ‘genuine error’ at the start of a claim. If you have any examples of the lack of notional entitlement acting harshly against families, please contact CPAG.

• Read the minutes in full

New caselaw

After waiting ages for some new tax credits decisions, three have come along at once. The following cases have been added to the Upper Tribunal (formerly social security and child support commissioners) website:

CSTC/475/2008 concerns the ‘main responsibility’ test for entitlement to child tax credit where there are competing claimants. A separated couple shared the care for their child and could not agree on who should receive child tax credit. The Judge found that the First-tier Tribunal gave too much weight to overnight stays and not enough to the claimant’s parental responsibility for a child during school hours. It was not correct to solely base the decision on the finding that the child spent a slightly greater proportion of his time with his mother than with his father.

CTC/3692/2008 concerns backdating of tax credits for refugees. The claimant was granted refugee status after two years in which she received asylum support payments for herself and her child. She claimed child tax credit and was not entitled to working tax credit. The Judge confirmed that when a claim for tax credits is made within three months of the date of being granted refugee status, it should be treated as made on the date of the asylum claim, and at the start of every tax year thereafter. However, a deduction from any tax credit due should be made for the full amount of asylum support paid, and there is no scope to interpret the law as applying different components of the support payment to different tax credits – so the amount of asylum support paid for an adult should be deducted from child tax credit. The Judge held that this was not discriminatory under the European Convention on Human Rights.

CTC/244/2008 concerns the definition of being engaged in qualifying remunerative work in the expectation of payment. The claimant argued that he was a company director but he never received a penny in the form of a salary and failed to produce any credible evidence of being engaged in qualifying remunerative work in any of the three tax years. The Judge dismissed his appeal.

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