3. Mr P complains that the AO has not appropriately considered the evidence he gave to it in relation to tax credit overpayments from 2013 to 2017.
4. As a result, Mr P has been caused distress and frustration as he feels that the AO’s investigation was weighted towards HM Revenue & Customs (HMRC).
5. As an outcome to his complaint, Mr P would like the AO to consider the evidence he gave to it.
6. Mr P complained to HMRC in May 2019 over a child tax credit overpayment which occurred in June 2017. HMRC paid tax credits from 2012 for one of his grandchildren while the child was at boarding school. His second grandchild started at the same school in 2013.
7. Mr P says that it took HMRC two years to start making payments for both children which is why he took out finance in 2015. He says this increased his income, which is what led to the overpayments.
8. Mr P complains that the AO has not considered the evidence he gave to it when he took his complaint about HMRC’s Tax Credit Office (TCO) to the AO in April 2021.
11. Before we decide if we should investigate a complaint, we look at whether there are signs the organisation has got something wrong. We do this by comparing what should have happened with what did happen. We have done this and, we have not found any indications that something has gone wrong.
12. Our principles outline the approach we believe organisations should take when delivering good administration and customer service. Our Principles of Good Complaint Handling say organisations should:
• listen to and consider the complainant’s views, asking them to clarify where necessary, to make sure the public body understands clearly what the complaint is about and the outcome the complainant wants • provide clear, accurate and complete information to their customers about the scope of complaints the organisation can consider; what customers can and cannot expect from the complaint handling arrangements • be open and honest when accounting for their decisions and actions. They should give clear, evidence-based explanations, and reasons for their decisions • Investigate complaints thoroughly and fairly, basing their decisions on the available facts and evidence.
13. Our Principles of Good Administration say:
• In their decision making, public bodies should have regard to the relevant legislation. Decision making should take account of all relevant considerations, ignore irrelevant ones, and balance the evidence appropriately.
Payment of child tax credits
14. Mr P complained to the AO that HMRC’s letter, of 6 May 2020, incorrectly stated that it had added his second grandchild to the claim from 1 September 2013. HMRC explained that it sent a final award notice for 2013-14 in October 2014. It explained for the following tax year, it included both children, and it had paid the maximum child tax credit (CTC) of £210 per week for both children. Mr P says this is incorrect. He says he did not receive payments for both children until October 2015. Mr P complains the AO did not consider, or comment on, this.
15. The AO explained that HMRC’s final award notice for 2013-14 considered childcare costs of £179 for one child up until 31 August 2013, then, £348 (the cost of childcare) for two children from 1 September 2013.
16. Mr P asserts HMRC did not start making payments for both children until 2015. He explains this is why he took out finance in 2015.
17. Mr P says that due to HMRC delaying paying child tax credits for both children, this has caused him to take out various finances. He says because of this, the increases in his income caused the overpayments. He is concerned the AO has not taken this into its account.
18. While we have seen the AO has not specifically given a view on HMRC not paying CTC until 2015, it has explained that two children were added on the claim from 1 September 2013. Mr P says he sent two letters to HMRC explaining that it had not been paying him his full entitlement for both children, yet it did not respond or make the required payments. He explains he sent copies of the letters he sent to the AO, but the AO did not reference them.
19. We contacted HMRC to clarify when it actually paid the tax credits to Mr P. It provided a timeline:
• In October 2013 Mr P called to advise his second grandchild was attending boarding school • On 7 October 2013, HMRC referred Mr P to its compliance team • Mr P made several calls to HMRC who told him it had referred the matter to the compliance team but he says he was unable to contact them • In May 2014 a note from the compliance team shows ‘not received childcare details’ and its plan to get them from Mr P • In October 2014, Mr P called back and provided the childcare details and the matter returned to the compliance team • On 24 October 2014 HMRC paid £2,519.58 to Mr P for childcare costs for the 2013-14 tax year.
20. It seems that HMRC paid Mr P in October 2014, not in 2015 as he asserts. We acknowledge the AO has not gone into the level of detail Mr P may have wanted about a one year delay. However, the evidence we have seen shows HMRC had been trying to get information from Mr P, which caused a delay.
21. We consider that the AO could have gone into more detail about what date HMRC paid tax credits to Mr P in 2014. However, we do not consider it falls so far short of our Principles that it amounts to a failing because technically, what the AO said was correct. It seems there was some misunderstanding between Mr P and the AO regarding him being eligible for, and in receiving payments. It is difficult to see what difference the AO adding more detail would have made. We recognise HMRC did not pay the money as soon as it might have. Mr P implies that this was HMRC’s fault, whereas the timeline above does not support that.
22. Mr P also told us and the AO the reason he took out finance was that HMRC delayed paying him until 2015, we can see that this was not the case. It paid him in 2014.
November 2016 overpayment
23. In September 2016, HMRC wrote to Mr P to ask him to check his annual household income for 2015-16 tax year. It explained that Mr P said his income was over £38,000 but it held a figure of over £60,000 based on the information given. The following month Mr P confirmed the figure it held was incorrect.
24. The AO explained that once Mr P contacted HMRC to explain his income, it based the award on an income of £34,477. The AO explained that as the 2015-16 award was originally based on an income of £17,000, and not £34,477, an overpayment occurred. The child tax credit award was reduced from £18,311 to £11,147. This meant there was a £7,164.35 overpayment.
25. Mr P says that the AO knew that HMRC had increased his income but did not include this in its conclusion.
26. We have seen that the AO has included this within its investigation report. It outlined that HMRC held a figure of over £60,000, but Mr P contacted it in October 2016 to confirm his income was actually over £38,000. It then based his award on an income of £34,477. Furthermore, the AO noted that HMRC notified Mr P on 30 June 2017, when it sent out its final award notice and if he did not agree, he could request an MR within 30 days. The AO noted he did not do this until 3 August 2020.
27. We consider that the AO has worked in line with our Principles of Good Complaint Handling. It based its decisions on the available facts and evidence.
Evidence Mr P gave to HMRC
28. Mr P complains that the AO did not comment on HMRC changing childcare to tuition fees.
29. The AO explained that, in November 2016, HMRC sent an initial award notice based on income of £39,477. The entitlement was therefore £5,510.52 in tax credits for 2016-17 tax year.
30. In May 2017, it asked for Mr P to send it evidence of boarding costs for his children. It asked for him to respond by 24 June 2017. The AO explained Mr P telephoned HMRC on 6 June and he told HMRC he had an income of over £60,000.
31. On 28 June, HMRC removed childcare costs from 2016-17 and 2017-18 tax years because Mr P had not sent in the evidence it had requested.
32. On 30 June, HMRC produced a final award notice which showed it had removed the childcare costs and that he was no longer entitled to tax credits based on his income. HMRC had already made payments to Mr P of £4,545.76 and because he was no longer entitled to have tax credits, this was included into the outstanding overpayment from the previous year. This increased the total overpayment to £11,171.11.
33. The AO explained that Mr P sent in evidence to HMRC of childcare costs in July 2017. On 3 August, HMRC wrote to Mr P to say that it would not accept this evidence because it did not distinguish between residential boarding fees and tuition fees.
34. We consider what Mr P is saying here is that HMRC had previously accepted the same evidence he had been providing it in previous years. But, on this occasion, it decided the evidence did not distinguish between boarding fees and tuition fees. He feels the AO did not comment on this.
35. However, we have seen evidence the AO did comment on this. It said that the evidence Mr P provided did not highlight the fees associated with childcare, as opposed to the fees associated with tuition. It explained Mr P was not entitled to tax credits due to his income. Even if he had provided the correct evidence, due to his increase in income, he was not entitled to any tax credits.
36. The relevant guidance that HMRC considers when determining eligibility for the childcare element of working tax credits is The Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002, Reg. 14 (1), (2) and (5). These say:
‘A person who is incurring and paying relevant childcare charges for a child in a residential boarding school, may be entitled to claim childcare costs providing that the school meets the conditions and those costs do not include any element for compulsory education.’
37. Information held within HMRC’s Tax Credits Technical Manual (2016) suggests that relevant childcare charges are incurred and paid by the claimant for childcare provided for any child for which they are responsible. Relevant childcare charges do not include charges paid in respect of the child’s compulsory education. We consider this highlights that HMRC needed to see a breakdown of costs which would show what aspects of the boarding school fees related to compulsory education and which related to non-compulsory.
38. The AO concluded that Mr P did not provide the breakdown of fees that HMRC had asked for. It came to its view having looked at the invoice from the school Mr P gave. However, this did not provide a breakdown of fees. It also explained that even if he had provided the right evidence, the overpayment would still have occurred because when his income went up, he was not entitled to tax credits. We consider therefore, that the AO worked within our Principles of Good Complaint Handling as it provided Mr P with an open and honest account of how it arrived at its decision. It gave a clear, evidence based explanation.
HMRC did not ask the school about fees
39. Mr P complained to the AO that when HMRC decided it could not accept the evidence he gave (it could not decipher between tuition and childcare fees) HMRC should have contacted the school. HMRC explained to Mr P that it does not contact schools and it is for Mr P to provide evidence.
40. Mr P says he sent evidence to the AO which indicated that HMRC will contact a childcare provider if the claimant cannot provide the information it requires. Mr P complains that the AO did not consider this evidence.
41. We looked at the evidence Mr P sent to the AO to back up his view that HMRC does in fact contact providers was an excerpt from information about tax free childcare it says:
‘HMRC can ask you about your income, employment, personal details, and your tax-free childcare payments. HMRC may also get in touch with your employer or childcare provider if you can’t provide the information we need.’
42. Unfortunately, this is in relation to tax free childcare, not child tax credits. It is a separate tax payment. Therefore, this is not relevant to Mr P’s circumstances.
43. The AO explained that HMRC worked in line with its Code of Practice 26 (COP 26) guidance. The COP 26 guidance sets out both the claimant and HMRC’s responsibilities. It explained one of the responsibilities of the claimant is to provide accurate and timely information. It explained that as COP 26 sets out this as a claimant’s responsibility, it would not expect HMRC to contact the boarding school.
44. While the AO did not specifically comment on the evidence Mr P gave, it was in relation to a separate kind of tax payment. As such, we would not have expected the AO to consider it as part of its analysis or evidence.
45. We appreciate and understand that Mr P was certainly trying to do his best for his grandchildren, and the circumstances he has found himself in are very unfortunate. There is no question that he has done his best to make sure the grandchildren have the best opportunities available to them.
46. The AO considered the concerns it could. The AO provided Mr P with a detailed consideration and included the relevant evidence and details to address his concerns. This was appropriate and in line with our principles.
1. We have carefully considered Mr P’s complaint about the Adjudicator’s Office (AO). We have seen no indication that the AO did not undertake a robust investigation into Mr P’s concerns about HMRC.
2. We appreciate Mr P has experienced distress and financial difficulties as consequence of his outstanding tax credit overpayments. However, we have not attributed any wrongdoing to the AO.