19. Before we decide if we should investigate a complaint in more detail, we look at whether there are signs the organisation concerned has got something wrong. We do this by comparing what should have happened with what did happen. If what happened fell far short of what should have happened, we call this a failing. When we see signs of a failing, we next look at whether that failing had a negative impact on the person in question. If we think it did, we will go on to consider what, if anything, the organisation has done to try to put things right.
20. Having done this, we have decided we will take no further action on Mr L’s complaint. For the most part, we consider nothing went wrong. But, where it did, we consider HMRC has already taken sufficient action to put things right.
Mr L’s liability for the overpayment
21. In essence, Mr L’s complaint is that as he and his now ex-wife separated in 2012, she should be liable for repaying the overpayment, not him, as she renewed the joint claim without his knowledge.
22. Mr L says they separated in August 2012, which is backed up by the divorce paperwork he sent us. But the date of their separation is not directly relevant to this scenario. We need to consider what Mr L should have done regarding the joint claim when he and his now ex-wife separated.
23. In short, he should have told HMRC they had separated as soon as it happened. He should also have told HMRC about his change of address. He did neither of these things. So as far as HMRC is concerned, he was part of the joint claim and is liable to repay the overpayment.
24. The ‘Tax Credit Management Act 2002’ and related regulations contain the rules for governing tax credits for HMRC and customers. These say:
‘In the case of a joint claim, the notification of the change may be given by either member of the couple for whom the claim was made.’
25. This means it was the responsibility of both Mr L and his ex-wife to make sure details about income and other details, including marital status, were updated. We note Mr L’s claim his ex-wife said she would deal with the overpayment, but that is a matter between them - it is not for us, the AO or HMRC to get involved in.
26. Section 28 (3) and (4) of the ‘Tax Credit Management Act 2002’ states the following:
‘For overpayments made under awards on joint claims, the claimant and their partner are jointly and severally liable for the amount of overpayment to be repaid.’
Under this legislation, Mr L and his ex-partner are jointly liable for the overpayment of their awards.
27. HMRC can only act on the information available to it, and in Mr L’s case it was unaware of his separation in August 2012 from his ex-partner until 24 April 2014.
28. Neither Mr L nor his ex-wife reported the separation before this date. As a result, HMRC believed they were still both part of the joint claim until March 2014. This means both are liable for any overpayments, and so HMRC is right to pursue recovery. As such, we have decided to take no further action. We address the timeliness of that recovery below.
HMRC’s letters about overpayments
29. Mr L says HMRC says it sent him letters about the claims and overpayments, but he has not received any. He says he was at the family home in early 2013 but had left by autumn. He says he stayed in a caravan until February 2014 and so did not receive letters. Mr L says he should not be responsible for the later debt (debt that happened after his separation and after he signed declarations in 2010) as he was not in the marital home and was living in a caravan, so he did not receive HMRC’s letters.
30. Essentially, what Mr L is saying here is that from 2010 his ex-wife renewed the claim, and he did not have knowledge of it or the overpayments and did not personally receive any letters. He says he did not know anything about any claims made after they separated in 2012.
31. Mr L asserts he has sent HMRC categorical proof he was separated and his ex-wife used his income details to renew the claim, so he should not be liable for half of the overpayments.
32. Every year, HMRC sends a renewal pack to tax credit recipients. It is the recipients’ responsibility to check their details are correct. In many cases, the renewal will go through automatically if the recipient does not update HMRC with any change in circumstances.
33. While we appreciate Mr L’s circumstances, this issue is between him and his ex-wife. HMRC can only act on the information a claimant provides it. Until April 2014, as far as HMRC was concerned, Mr L was in a joint claim at the address given to it when they made the claim in 2008. Mr L had a responsibility to tell HMRC about his change in circumstances but did not do so until 2014.
34. HMRC could not have known he was separated and no longer at his former address. It cannot reasonably have been expected to do anything differently.
35. As with the previous issue, we fully acknowledge the difficult position Mr L has found himself in. This would have been avoided had he updated HMRC with his change in circumstances when he should have. As we consider HMRC has done nothing wrong here, we have decided to take no further action.
HMRC’s delay in pursuing the debt
36. Our Principles for Remedy say where mismanagement or poor service has led to injustice or hardship, organisations should try to offer a remedy (an action to put things right) that returns the complainant to the position they would have been in otherwise. If that is not possible, the remedy should compensate them appropriately.
37. Our Principles of Remedy go on to say there is a range of remedies available, such as:
• an apology, explanation and acknowledgement of responsibility • financial compensation for direct or indirect financial loss, loss of opportunity, inconvenience, distress or any combination of these.
38. Mr L says he did not receive letters HMRC say it sent to him from 2012. HMRC explained it sent letters to him about the overpayment in 2014, and it did not receive any notifications from Royal Mail they had been returned as undeliverable. It sent letters about annual renewals to the address on the joint claim from 2008 until it was notified of the separation and Mr L’s new address in 2014.
39. As already noted, we are not critical of HMRC here, as it simply did not know Mr L was no longer at his previous address, and it was reasonable to believe he still lived there.
40. We have seen Mr L wrote to HMRC as part of his complaint in March 2021. In this he says he does recall HMRC wrote to him in 2014 about the overpayment but he contacted his ex-wife, who told him she would get it sorted. Mr L goes on to say this shows HMRC accepted she was solely responsible as he heard nothing more about the debt until November 2020.
41. Mr L did not bring this specific issue to the AO, and it has not given a response to him on this matter. However, since the AO provided its report, HMRC offered Mr L £50 to recognise the delay from 2014 to 2020 in pursuing the debt.
42. We agree HMRC took a long time to contact Mr L about the overpayment. It must have been distressing for him to learn about the debt so long after it had been incurred.
43. HMRC has accepted it took too long to recover the debt. It accepted that it had offered poor service and gave Mr L £50 in respect of this. HMRC’s ‘Complaints and Remedy’ manual says its payments for worry and distress are meant to be a token - a way of acknowledging mistakes and delays have affected someone badly. The payments will usually range between £25 and £500, but most are at the lower end of this range.
44. Though it is unlikely Mr L experienced any concern or distress during those six years, to learn of the recovery action in November 2020 would certainly have caused distress. The amount of time between the overpayments occurring and recovery starting would only have served to exacerbate this stress. HMRC has apologised and offered compensation that is in line with its guidance. We consider that by doing this, it has acted in line with our Principles for Remedy outlined above.
45. We empathise with the situation Mr L is in. To be told debt from several years ago is now being collected would certainly come as an unwelcome shock, especially since Mr L says he knew nothing of the claim being made by his ex-wife. Our decision is not in any way intended to lessen or undermine this.
The AO
46. Mr L complains the AO did not consider the evidence he sent, it used the pronoun ‘you’ (which he feels implies he knew about the claim and claims made after 2010) and it did not accept HMRC did not send him any letters about the claim either before or after he and his ex-wife had separated. He complains the AO has not considered his view that HMRC should have checked with him each time his ex-wife renewed the claim.
47. Our Principles of Good Administration say organisations should act fairly and proportionately. They should do this by investigating complaints thoroughly and fairly, basing their decisions on the available facts and evidence, and avoiding undue delay. Public bodies should deal with complaints objectively, fairly and consistently so similar circumstances are handled similarly.
48. The AO has not made specific reference to the evidence Mr L gave it - in particular, the divorce papers that show the date they separated. However, we would not necessarily expect the AO to specifically reference in its report every document and every comment it has considered during its investigation, particularly where that evidence is not directly relevant.
49. The AO explained HMRC was unaware of the separation until Mr L’s ex-wife told it in April 2014. For the reasons already set out, the divorce papers show when Mr L and his wife separated, but the relevant factor in all of this is what Mr L did when they separated. He should have told HMRC of his change of circumstances but did not. When they separated is, for the purposes of this specific matter, largely irrelevant. The papers may support Mr L’s claim he did not know about the joint claims, but that is a matter for him and his ex-wife to address, not HMRC.
50. The AO appropriately looked to see whether HMRC acted within relevant guidance or legislation. The AO correctly explained HMRC acted in line with the ‘Tax Credit Claims Regulations 2002’, which say:
‘In the case of a joint claim, the notification of the change may be given by either member of the couple for whom the claim was made.’
51. Mr L is unhappy that both HMRC and AO use the term ‘you’ in the background of events and details of the joint claim. He appears to take offence to this because it implies he knew about the tax credit claim and had something to do with the claim after co-signing the declarations in 2010. The AO report uses the term ‘you’ because until April 2014, HMRC treated the claim as a joint claim, and as such, both parties in the claim are referred to as ‘you’.
52. Mr L complains the AO report details that HMRC says it sent a letter about the overpayment in July 2013. He says he has not received a letter addressed to him at any time about an overpayment. He explains he does recall a letter about an overpayment in 2014, but his former wife said she would sort it. The AO clarified his ex-wife made an arrangement, but only for her half of the overpayment. Again, that is a matter between Mr L and his ex-wife that does not concern HMRC.
53. We consider the AO has appropriately explained its decision and how it came to its conclusions. It has also explained HMRC’s guidance. Regardless of whom they were addressed to, HMRC sent letters out to the addresses they held for the joint claim at the time. We cannot see how HMRC could have known they had separated until it was told in April 2014.
54. We consider the AO acted in line with our Principles of Good Complaint Handling and have decided to take no further action.
55. We appreciate the difficult financial and emotional impact the overpayment has had on Mr L. Ultimately, though, this sadly appears to be a result of his ex-wife continuing to claim tax credits after they separated and their failure to notify HMRC of the change.