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DMBM570210 | Debt and return pursuit: miscellaneous charges: overpayments of Working Families Tax Credit / Disabled Person's Tax Credit

From HM Revenue & Customs · Debt Management and Banking Manual

The majority of this manual will be archived on 1 July 2024. If there is content within this manual you use regularly, email [email protected] to let us know.

Since the introduction of WTC/CTC, new WFTC/DPTC overpayments should be exceptional.

Where overpayments of WFTC/DPTC are discovered local compliance offices are responsible for raising the charges on SAFE.

Action by Compliance

Where an overpayment of WFTC/DPTC arises the compliance office will issue the customer with a ’decision letter’, which contains an initial request for payment, and enter the charge on SAFE.

If the overpayment is not paid, SAFE will

  • issue payment reminders, and if the charge is still not paid after the final application

  • place an entry on the DTO SAFE Local Action Worklist (subject to administrative limits).

Appeals

A customer has a statutory right of appeal of one month from the date an overpayment decision is made.

Northern Ireland

For Northern Ireland SAFE will direct the Local Action worklist straight to the EIS Edinburgh (Belfast Team) and not to local debt technical offices. EIS Edinburgh (Belfast Team) will deal with all aspects of recovery and enforcement but may ask you to make a personal call.

Debt technical office action

Application for payment

On receipt of a SAFE Local Action worklist item you should send the customer a warning letter enclosing a return envelope addressed to your office.

If there is no response within 14 days, arrange for a call to be made.

Note: You should bear in mind in your dealings with the customer that WFTC/DPTC debts are tax credits not benefits.

Enforcement proceedings

Scotland and Northern Ireland

You should initially make every effort to collect the debt short of proceedings. But if you feel that enforcement proceedings are appropriate, refer the papers

  • in Scotland the Recovery Support Team at EIS Edinburgh

  • in Northern Ireland EIS Edinburgh (Belfast Team) with

  • a copy of the Overpayment determination

  • a note of any tax arrears outstanding.

The appropriate office will authorise enforcement proceedings and provide the necessary guidance. Please note that distraint is not an appropriate method of recovery for these debts.

England and Wales

If the initial letter and a personal call at the address shown do not lead to payment,

  • issue a final warning letter

  • B/F the case 14 days and if the debt remains unpaid

  • perform an RP check (DMBM615040)

  • prepare an imminent proceedings list

  • complete form N322A (DMBM665470) and

  • send or take it with attachments to the appropriate county court together with the appropriate fee (DMBM668750).

An action in the county court for recovery of a WFTC/DPTC overpayment is brought by way of an application under Part 70.5 of the Civil Procedure Rules 1998 (commonly known as CPR70.5).

The application is ex-parte, which means that there is no hearing.

CPR70.5 is a short circuit procedure which dispenses with the early stages of proving a debt (particulars of claim and so on) as part of the normal county court process.

You cannot use the County Court Bulk Centre for these cases.

Action by the court

An officer of the court can give the court's order. It does not have to go before a district judge. It is not a judgment but has a similar effect, including registration by Registry Trust Ltd. If it is satisfied with your application the court will

  • make the order and

  • serve form N322 on the respondent (the debtor), which orders them to pay the total sum, including the court fee.

The court will

  • send you a copy of the order on form N322.

This shows the case number and the terms of the order.

You should

  • check that the details on the form N322 are correct

  • enter the case number on the papers and in column 3 of Book 28

  • keep the N322 securely with the papers.

Legislation

If the court questions the legislation on which your claim is based, tell them:

“Paragraph 10 of Schedule 2 of the Tax Credits Act 1999 provides that Section 71 of the Social Security Administration Act 1992 (overpayments: general) shall have effect generally in respect of overpaid tax credits.”

Section 71(10) Social Security Administration Act 1992 says:

“Any amount recoverable under the provisions mentioned in subsection (8) above-

(a) if the person from whom it is recoverable resides in England and Wales and the county court so orders, shall be recoverable by execution issued from the county court or otherwise as if it were payable under an order of that court”

My application to the court is under Part 70.5 of the Civil Procedure Rules.”

Enforcing the court order

When you receive the court order

  • update the papers to show the "date of order"

  • retain the order with the papers

  • B/F for payment.

If the debtor does not pay within the terms of the order, telephone the debtor. Where you cannot contact the debtor by telephone, issue a warning letter (DMBM666340).

You may enforce the order by any of the normal means, except a judgment summons. You can however apply for an order to obtain information.

Cases of difficulty

Contact the Enforcement Technical Team (Debt Management Bradford) where:

  • there are any complications

  • the debtor makes any sort of application in connection with the case,

  • a higher debt manager considers that proceedings are undesirable

  • there is a linked tax-type debt.

Insolvency

If you receive notification of insolvency involving a WFTC/DPTC debt you should follow the instructions in the Insolvency (INS) manual in the normal way.

RLS

If a debtor goes missing, follow the procedures at DMBM875080.

Remission

The normal criteria for hardship apply equally to WFTC/DPTC debts. Although in some cases a comparatively low amount will be recoverable, that in itself is not material.