Scottish Social Security Consortium

Minutes of meeting 17 February 2004

Present:
Abigail Bremner Citizens Advice Scotland
Michael Collins Scottish Refugee Council
Judith Paterson Child Poverty Action Group in Scotland
Bryan Ryan East End Community Law Centre
Derek Sinclair Contact A Family
Jim Pearson Alzheimer's Scotland
Chris White Scottish Association for Mental Health

Charlie Gordon Adjudicator's Office
Helen McAlpine Adjudicator's Office

Observing
Richard Gass Rights Advice Scotland

Apologies:
David Brown Help the Aged
Susan Drew Highland Advice and Information Network
Hazel Kennedy Granton Information
Craig Mackenzie One Plus
Angela Toal The Action Group

Introductions

Judith Paterson asked attendees to introduce themselves and explained the purpose and remit of the group to those who were new.

Overpayments of tax credits

Abi Bremner started by outlining the sorts of problems experienced by Citizens Advice Bureaux clients in relation to overpayments. The main issues were as follows:

• 'In-year' recovery of overpayments - where the Inland Revenue had identified that clients had been overpaid tax credits, they were aiming to balance their books by the end of the financial year by recovering such overpayments from current benefit entitlement. This meant that clients in this situation would receive a lower tax credit payment for the rest of the financial year. Those who had moved from work onto Income Support were particularly badly affected as any overpayment was being recovered from their on-going entitlement to Child Tax Credit - taking them below their applicable amounts.
• The problem had been made worse by the fact that no-one at the Inland Revenue had taken responsibility for sorting it out. 'Top up' payments were now available for those who were experiencing financial hardship - but these were not well signposted, and would still constitute overpayments at the end of the financial year.
• The letters sent to clients to notify them of their reduced entitlement were confusing and unclear. They did not explain why entitlement had been reduced or signpost clients to 'top up payments'.
• The lack of information in these letters made it impossible to challenge overpayments as being 'unrecoverable' - and they were being recovered automatically.
• There are a number of common situations where Citizens Advice Scotland believes that overpayments should not be recovered, including where multiple giro cheques had been issued at the beginning of the year; where there had been problems reporting changes of circumstances and where the client had supplied the correct information on their application form, but this had been interpreted wrongly by the Inland Revenue.

Judith Paterson then outlined the legal framework in which tax credits were being dealt with.

It was noted that overpayments do not technically exist until the end of the financial year. The 'in-year' recovery we were seeing right now related to 'likely' overpayments. As far as the Inland Revenue was concerned, if the money had been recovered by the end of the financial year, then no overpayment had occurred and the guidance in relation to dealing with overpayments did not apply. However, those who were receiving top-up payments would still have an overpayment at the end of the year.

Where an end of year overpayment had occurred the Inland Revenue should deal with it in accordance with the guidance laid down in COP 26 - What happens if we have paid you too much tax credit?

• 'In-year' overpayments - where the Inland Revenue think that an overpayment has been made, they will recover the money from a claimant's entitlement for the rest of the year. The calculation is done on the basis of working out what needs to be recovered by the end of the financial year, and then dividing this amount across the number of weeks left in the year.
• Top up payments - Top-up payments are available to those who are having overpayments recovered in this manner. According to guidance to qualify, claimants must demonstrate either financial hardship or that the overpayment has been caused by 'official error'. Top up payments top up income to what it would have been if the overpayment was being recovered at the end of the financial year less a deduction of 10% (for maximum tax credit) or 25% (other awards above the family element)
• Recovery at the end of the financial year - Where overpayments were recovered after 6th April 2004, on-going entitlement was protected to a large degree. The maximum amounts that can be recovered from on-going entitlement in these circumstances are as follows:


• Where a claimant is getting a maximum tax credit payment - 10%
  
• Where a claimant is only getting the family element of CTC - 100%
  
• All others (ie. where some combination of tax credits are in payment, but not at their maximum levels) - 25%
  
• Top up payments will stop on 6th April 2004 - but so will any recovery action until new awards are in place for 2004/05 (this could be on-going until September 2004).
• Income Support - For the purposes of Income Support, full entitlement to CTC is taken into account If the CTC in payment is reduced to recover an in-year overpayment, IS is not increased to make up the difference. But neither is IS reduced where a top up payment is made.
• Housing Benefit and Council Tax Benefit - The guidance to local authorities is that HB/CTB entitlement should be calculated on the basis of the actual amount in payment, but this doesn't always seem to be happening in relation to in-year overpayments - where awards are sometimes calculated on the basis of what would be being paid if an overpayment was not being recovered. This is a particular problem for clients who received emergency payments at the beginning of the year. They may now be receiving significantly less in the way of tax credits where the overpayment is being recovered, yet are being treated as if they have the full amount for the purposes of paying their rent.
• End of year overpayments - HB/CTB entitlement should be based on the actual amount in payment (entitlement minus the overpayment). IS however would take into account the full amount of tax credit entitlement, regardless of the fact this amount would not be received by the claimant where there was an overpayment.
• Challenging the decision to recover an overpayment - It is not possible to appeal a decision to recover an overpayment, or the rate or length of the recovery period. (however, note that you can appeal decisions regarding entitlement where that is the underlying reason for the overpayment).
• Hardship - The Inland Revenue can write overpayments off on the basis of hardship (but note that they do not regard it as an overpayment unless it is outstanding at the end of the financial year) so it is worth requesting this. The Inland Revenue can also offset overpayments against what an award would have been had they had all the correct information about a claimant's circumstances.

Although a number of decisions involving Inland Revenue discretion cannot be appealed in the normal way, a complaint about the use of discretion can be taken to the Adjudicator's Office/Parliamentary Ombudsman.

Adjudicator's Office

Judith Paterson welcomed the two representatives from the Adjudicator's Office. Helen McAlpine outlined the remit and procedures relating to the Adjudicator.

The Adjudicator's Office deals with complains about the conduct of the Inland Revenue. However, it was stressed that the Adjudicator's Office cannot look at matters which can be dealt with by other forums, such as decisions which can be appealed, points of law and policy issues.

However, the issues the Adjudicator's Office can deal with include:

• Mistakes
• Delays
• Misleading advice from Inland Revenue staff
  
• Conduct of Inland Revenue staff (note that the complaints procedure is entirely different from any staff disciplinary procedure)
  
• The manner in which the Inland Revenue has exercised its discretion

Note that the Adjudicator's Office does not deal with complaints about how a representative has been dealt with by the Inland Revenue - their remit is customers and their affairs only.

The Adjudicator's Office can only deal with complaints after the Inland Revenue's internal system has been exhausted. The first stage in the internal system is to complain to the office which handled the tax credits claim. If it can't be resolved at this level, the second stage is to raise it with the appropriate Director's Office, which can look at compensation and offering an apology. Only if the complaint hasn't been resolved by this point can the issue be raised with the Adjudicator's Office. The leaflet AO 1 'How to complain to the Adjudicator if you are unhappy about the way the Inland Revenue or the Valuation Office Agency have handled your affairs or treated you'.

The Adjudicator's Office is of the view that, if there has been a mistake in the handling of someone's affairs by the Inland Revenue, then the least they are due is an apology. The Office can also look at awarding compensation for expenses incurred (such as telephone calls, postage and travel). However, as a general rule they cannot compensate for personal time. They can make payments in recognition of worry and distress where the circumstances warrant it. The levels and sorts of compensation available are the same as those outlined in the Inland Revenue leaflet COP 1 'Putting Things Right - how to complain'.

When deciding how to resolve a complaint, the Adjudicator's Office will look at whether the Inland Revenue has dealt with matters in accordance with their published codes of practice on the issue. The Adjudicator's Office can also intervene on the basis that a complaint to the Inland Revenue has been handled badly.

The Adjudicator's role is firstly to ask 'are the mistakes as a result of what the Inland Revenue has done'? Where they are, the adjudicator then looks at what the Inland Revenue has done to put them right in terms of an apology, compensation and payments for distress caused. The Adjudicator's Office also has a mediation role and will go back to the Inland Revenue to put the customer's version of events. It may be at this stage that the Inland Revenue agrees to accept a customer's views. However, where not agreement can be reached between a customer and the Inland Revenue, the Adjudicator will issue a formal decision on the matter in a letter. The Adjudicator's Office expects the Inland Revenue to abide by what is set out in the letter.

If a customer is unhappy about the final decision reached by the Adjudicator (or wishes to complain about the way their complaint was handled), they can take the matter to the Parliamentary Ombudsman. Note that, in order to involve the Parliamentary Ombudsman, the case must be referred to her by an MP. A customer can also go directly to the Parliamentary Ombudsman with their complaint without having first had to go to the Adjudicator's Office. However, because MP involvement is required, it is generally simpler to approach the Adjudicator first.

The Adjudicator's Office also provides feedback to the Inland Revenue on the complaints they deal with, and have seen some improvement in service as a result.

The Office fields between 3,000 and 4,000 calls per year asking for their assistance. These are dealt with by the 'assistance team' which looks in the first instance into whether the Adjudicator's Office can actually help at that stage. The Office has a live case load of around 90 potential investigations, with tax credits currently being the biggest issue they deal with. The Office expected an increase of tax credit-related enquiries at the end of the year, when overpayments would become finalised.

The Adjudicator's Office needed to receive a separate client mandate (from the Inland Revenue) confirming that a representative was acting on someone's behalf.

Nevertheless, the Adjudicator's Office is of the view that not enough complaints are getting through to them. It was the case that most issues about overpayments relate to how the Inland Revenue has exercised it's discretion and therefore the Adjudicator's Office would be the most appropriate option for challenging decisions.

Further issues discussed included:

• Overpayments - When an overpayment is identified, this should trigger the issue of leaflet COP 26, What happens if we have paid you too much tax credit? However, because something is not technically an overpayment if it is recovered in-year, this means that a number of people who may have wanted to challenge the decision to recover money from them may not now be able to. The Adjudicator's Office has been in discussion with the Inland Revenue over this. The Inland Revenue will not write-off in-year overpayments - however, they can do so at the end of the financial year. It is possible for the Inland Revenue to identify and 'freeze' overpayments during the year. They do this by awarding top up payments. Rather than recovering them 'in-year', these could be carried over until the end of the year, when a customer will have the opportunity to challenge them, or to request that they are written-off on hardship grounds. It is therefore important that everyone who thinks an overpayment was caused by an official error should ask for a top up payment so they can put their case to the Inland Revenue to have it written off at the end of the year.
• Official error - The definition of 'official error' was different to that used by the DWP. The Inland Revenue have a 'test (outlined in COP 26) which requires:
  
• That there has been an error by the Inland Revenue AND
  
• it was reasonable for a customer to have believed that their award was correct
• This test is well established in relation to tax matters and sets a higher threshold than the test used by the DWP. However, it is not yet clear how the test will operate in relation to tax credits.
• Notifying changes of circumstances - group members asked how far customers were expected to go to ensure that the Inland Revenue dealt with a change of circumstances. The Adjudicator's Office noted that it was a question of degrees, but customers were expected to take responsibility for their own claims. There was also an argument under the 'reasonable belief' test that an overpayment resulting from delay in acting on a change of circumstances could never be held to be irrecoverable on error grounds because, if you had personally notified a change of circumstances then you could not also believe that an on-going award was correct. However, there were arguments both ways. Note that it is still possible to complain about the way your affairs were handled in such circumstances, and receive compensation.
• Penalties - The Inland Revenue can impose penalties on customers who do not come forward with information. Group members were concerned that attempts to penalise customers who had not supplied information which as advantageous to their claim would be quashed by the Adjudicator's Office. The Adjudicator's Office noted that, if the Inland Revenue had technically applied the law correctly, then this would be a matter to be appealed rather than for the Adjudicator to look at.
• Jobcentre Plus - The Adjudicator's Office noted that they had discussed with Jobcentre Plus how they would handle situations where the problem fell between the responsibility of the Inland Revenue and Jobcentre Plus. Group members noted that there had been problems with JC+ advice on tax credits - advisers were not always picking up on entitlement eg. where the claimant was not older, or did not have a family, but was working over 30 hours per week on a low wage. Other cross-over areas include where a claimant has tried to notify a change of circumstances through JC+.

Rights Advice Scotland

Richard Gass from Rights Advice Scotland spoke to the group about this new organisation. The organisation had grown out of SLAWRA (Scottish Local Authority Welfare Rights Advisers) which had provided networking opportunities and support for local authority welfare rights advisers before local government organisation. Rights Advice Scotland would take over this role, as well as providing a campaigning voice for those in the local authority sector. Membership was currently only available to those employed by local authorities; however, an amendment would go before their next AGM to allow for affiliated members (with no voting rights) from other organisations.

We agreed that there was the potential for joint work between Rights Advice Scotland and the Scottish Social Security Consortium in the future.

Minutes of previous meeting

The minutes were agreed.

Information Exchange

Disability Living Allowance - Scottish Association for Mental Health noted that award notices for DLA now say 'Do not destroy'. This is as a result of problems where claimants disposed of award letters, not realising how important they were as a passport to other entitlements.
Acting for a third party - Chris White highlighted that the DWP had recently drawn up guidelines on what was acceptable to demonstrate the consent of a client to act on their behalf. This was not a public access document. Chris stated that providing the name, date of birth, NINO and a description of the case should be enough to enable a representative to act on behalf of a client.
SAMH Conference - Chris also noted that SAMH were having a conference in Perth on 19th March - an invitation had previously been circulated to all group members.
Direct Payments - Jim Pearson raised the issue of clients with dementia who could not open bank accounts but who were nevertheless receiving repeated contact from the DWP regarding moving off payment by giro cheque or order book. Chris White noted that the Exclusions Unit within the DWP was currently writing guidelines for the service that would be available to those who could not use direct payments. This would be a cheque-based system, similar to the giro system but with more security.
Children leaving local authority care - It was noted that children leaving local authority care at 16 and 17 would no longer be able to access social security benefits from April 2004 (those who were lone parents, who had disabilities or for other reasons were not able to work can continue to claim Housing Benefit but nothing else). Support would instead come from local authority funding streams. It was noted that this should include compensation for the fact that they could no longer access Community Care Grants because they would not be in receipt of a qualifying benefit. It was not clear whether this would also apply to unaccompanied child asylum seekers.
Child Poverty Action Group - Judith noted that both Danny Philips and Martin Barnes (national director) had both moved on. Danny's replacement was John Dickie, who had previously worked for the Scottish Council for Single Homeless.
ScoLAG - CPAG was responsible for providing the update section in ScoLAG. Judith was keen to include other organisations in this and would be happy to accept articles on any hot topics in welfare rights (1,000 words, next deadline 15th April).
Faxed appeals - The fact that Glasgow Disability Benefits Centre has stopped accepting faxed appeals was raised. This appeared to be the result of recently circulated guidance, yet case law was in place saying that faxed appeals were acceptable. Chris White promised to investigate this issue through the Social Security Standards Committee Consultative Group. [Note that it has now been clarified that there has been a mistake in guidance issued - posted, hand-delivered and faxed appeal lodgements are acceptable, but applications sent by e-mail are not.]

Topics for future meetings

A speaker on local authorities and cross-over social security issues was suggested as one possibility.

The group agreed to approach solicitor Hilary Patrick to talk about community care and asylum seekers. The background to this was that failed asylum seekers could not get local authority support unless they had community care needs above those arising from destitution. In Glasgow a very low percentage of asylum seekers were getting support in relation to this (in fact, they were getting evicted without a needs assessment from the local authority), whereas in Edinburgh the figure was 25%. The group was interested to find out more about what best practice should be. The issue was the interpretation of the National Assistance Act and there may be a need for solicitors to challenge decisions in this area.

Date of next meeting

The next meeting will take place from 1pm-3.30pm on Thursday 6th May at the Citizens Advice Scotland offices in Edinburgh.

Future meeting dates were as follows:

Tuesday 28th September at CPAG offices in Glasgow
Monday 22nd November at CAS offices in Edinburgh

Back to the Scottish Social Security Consortium main page

For more information contact:
Judith Paterson
Child Poverty Action Group in Scotland,
Unit 9, Ladywell
94 Duke Street,
Glasgow G4 0UW
0141 552 3303
email jpaterson@cpagscotland.org.uk

Abigail Bremner
Citizens Advice Scotland
Spectrum House
2 Powderhall Road
Edinburgh EH7 4GB
0131 550 1000
email bremnera@cas.org.uk