Since 2003, millions of people have been overpaid tax credits. As the law stands, HMRC can ask claimants to repay all overpayments no matter how they were caused. In practice HMRC have developed a dispute procedure whereby claimants who agree they have an overpayment, but who believe it was caused because of a mistake by HMRC, can ask HMRC to write off the overpayment. This dispute process is set out in Code of Practice 26.

Delays

Although COP 26 makes the process seem relatively straightforward, in practice it has been far from ideal. LITRG have seen many cases where responses to dispute letters have taken over a year, and many more that have taken more than six months. These are the lucky ones, some claimants who have sent disputes to HMRC received no response at all. Often the joy of receiving a response was marred upon opening the letter and finding a three line response to a detailed five page letter, or an explanation that made no sense. Further frustration was caused by the fact that none of the responses to disputes contained a contact telephone number, instead claimants and advisers were forced to write further letters which were sent back in to the dispute ‘black hole’.

Over the last few months, HMRC have introduced new processes for the Customer Service and Support Group (CSSG) teams dealing with disputes. These have resulted in some improvement in the standard of letters that are sent by HMRC and we have been assured by HMRC that disputes should be answered much quicker than they have been in the past.

The new team

However, much more was needed to make the whole process work to ensure that claimants’ disputes were looked at thoroughly and written off where appropriate. In recognition, HMRC have set up a new team within CSSG who will deal with dispute and complaint letters that are sent by organisations offering free advice to tax credit claimants. This includes voluntary sector agencies, local authority welfare rights, other welfare rights workers and professional advisers carrying out pro-bono work. These disputes are generally at a different level due to the knowledge of the agencies concerned.

Letters from voluntary sector agencies should now follow a new process:

• Disputes, complaints and explanation requests from these agencies should be sorted and forwarded to the new ‘Intermediaries Dispute and Complaints Team’ (IDCT). This means that organisations should continue to follow the same processes for disputes and complaints as they do now, by sending them to the Tax Credit Office in Preston. Letters should be automatically identified as coming from an intermediary organisation and forwarded to the new team.
• All items allocated to the IDCT will be acknowledged within 5 days. This acknowledgement should include details of the team dealing with the issue and a contact number for the team manager.
• Cases will be dealt with in date order. For complaints that take longer than 15 working days, or explanations and disputes that take longer than 30 working days, an interim response will be sent to advisers which will contain contact details of the allocated caseworker. A date by which a full response can be expected should also be given. 
• If an update is required, advisers can make direct contact with either the team manager or the allocated caseworker.

Feedback from Advisers

The new IDC team is fully operational and HMRC are now keen to seek views on how well the team is working for advisers.

LITRG has volunteered to collect the experience (good and bad) of advisers and to feed it back to HMRC via the Tax Credit Consultation Group. In particular we are interested to hear from advisers:

• who find that their letters are not being answered by the new team, and who think that their organisation should be included. Letters from the team should have ‘Intermediary Complaint and Dispute Team’ on them;
• who do not receive acknowledgement letters within the specified time periods, or who do not receive interim letters within the specified time periods;
• who receive letters with no contact details;
• who do receive a response, but find that their points have not been addressed fully or evidence has not been considered.

LITRG welcome the introduction of this team, and in particular the steps HMRC have taken to address the problems with the dispute process.

However, we have also expressed concern that unrepresented claimants and those with paid advisers will not have such a service offered to them. HMRC have given assurances that they are rolling out measures across their CSSG teams more generally to ensure that the problems identified above are addressed for all claimants.

As with all such initiatives, the proof will be in the pudding.