Title: THE SOCIAL SECURITY COMMISSIONERS
Author: Poynter
Last saved by: Helen Frith
Company: Unisys

CH/2456/2006
DECISION OF THE SOCIAL SECURITY COMMISSIONER

DECISION
1	The local authority’s appeal succeeds. The decision of Manchester appeal tribunal given on 9 May 2006 under reference U/06/929/2005/04482 is wrong in law and I set it aside. In exercise of the power conferred by paragraph 8(5)(b) of Schedule 7 to the Child Support, Pensions and Social Security Act 2000, I make the fresh findings of fact set out at paragraph 22 below and I give the decision that is appropriate in the light of those findings namely:
The sum of 1,999.08 has been overpaid to the claimant as housing benefit for the period from Monday 28 July 2003 to Sunday 3 October 2004. Manchester City Council is entitled to recover that sum from the claimant.
In addition, the sum of £411.58 has been paid to the claimant as excess council tax benefit for the period from Monday 28 July 2003 to Sunday 3 October 2004. Manchester City Council is also entitled to recover that sum from the claimant.
REASONS
Introduction
2	This is an appeal by Manchester City Council (Manchester) who are represented by Mr Howard Mason, the Technical and Support Services Manager of their Revenues and Benefits Unit. Ms Kathy Byra of Manchester Advice represents the claimant. I have also received submissions on one aspect of the appeal from the Secretary of State for Work and Pensions. I am most grateful to the representatives for their assistance and I must offer my apologies to, in particular, the representative of the Secretary of State for the fact that the issue on which he assisted me (the issue about the abolition of benefit periods that I address at paragraphs 30 to33 below) did not in fact arise on the facts as I have eventually found them to be.
The issue
3	It is not in dispute that, for a period of a little over 14 months, Manchester overpaid the claimant housing benefit (‘HB’) and paid her excess council tax benefit (‘CTB’) as set out above (‘the Overpayments’). The issue in this appeal is whether Manchester are legally entitled to recover the Overpayments from the claimant. The tribunal decided that they were not. Manchester now appeals to the Commissioner against that decision with the leave of Mr Commissioner Pacey.
The tribunal’s decision
4	The Overpayments occurred because Manchester calculated the claimant’s entitlement to HB and CTB using incorrect figures for her income from tax credits. Manchester says that they did so because the claimant failed to inform them of the correct figures. The claimant denies this. Put into legal terms, her case is that the Overpayments were caused by official error or errors on the part of the Inland Revenue (now HM Revenue & Customs) (‘the Revenue’), which administers the tax credits scheme. She says that she received many letters notifying her of tax credit awards that were obviously incorrect. Where this was the case, she raised the error with the Revenue but where they were correct she notified Manchester of them. She could not have known at the time that she was being overpaid because she did not know her true entitlement to tax credits.
5	The tribunal accepted the claimant’s argument. The relevant parts of its statement of reasons were as follows:
‘It is clear that the overpayments arose because of multiple changes which occurred in the appellant’s entitlement to Working Tax Credit and Child Tax Credit. At the oral hearing, the appellant told me that she was receiving a new award of Tax Credit almost every week and each time she received one she would telephone the Revenue to inform them that some of the awards were not correct. On each occasion she was told that the Tax Credits would be sorted out by the Revenue in the next tax year. In respect of those Tax Credit awards which the appellant believed to be correct, she sent them to the local authority. She told me ultimately it was decided that she had been overpaid tax credits by £1400. I accepted the appellant’s evidence entirely.
In its submission, the local authority indicates that it should have been clear to the appellant that her awards of Housing Benefit and Council Tax Benefit were based on incorrect figures and that she was being overpaid benefit as her weekly income was much higher than that used to assess her benefit. On the other hand, the Presenting Officer told me that there was a wide variation in the Tax Credit figures with lots of revisions having been made. On the basis of the appellant’s evidence, I had no doubt that there was considerable confusion surrounding the awards of tax credits, especially since she received new awards so frequently. The matter was further complicated because during the relevant period, the appellant obtained a new job. Given the considerable confusion surrounding the awards of Tax Credits, I had no doubt that the appellant could not have been expected to realise that she was receiving an overpayment from the local authority.’
Was the tribunal’s decision wrong in law?
6	It will be clear from the fresh findings of fact that I make at paragraph 22 below, that I do not believe the tribunal’s view of the facts can withstand a full analysis of the documentary evidence. However, I have no power to address the facts of the appeal unless and until I am first satisfied that the tribunal’s decision was erroneous in point of law. I must therefore approach that issue on the basis that the facts as the tribunal has found them to be.
Did the tribunal decide there had been an official error?
7	Manchester’s case before the Commissioner is straightforward. They say that the tribunal erred in law by considering whether the claimant could reasonably have been expected to realise that she was being overpaid without first making a finding that the overpayment had been caused by an official error.
8	If the tribunal had indeed done what Manchester says it did, then that would, of course, be an error of law. I hope it is uncontroversial (and therefore at this stage I do not cite authority) that, as a general rule, all overpayments of HB and payments of excess CTB are recoverable. The only exception to that rule is where the overpayment or excess payment was caused by an official error. The issue whether the claimant could reasonably have been expected to realise that she was being overpaid only arises as an exception to that exception: even if the overpayment was caused by an official error it is nevertheless recoverable where, to paraphrase, the claimant ought reasonably to have spotted the error. Therefore, in the absence of a finding of official error, a finding about what the claimant could have been expected to realise would be irrelevant.
9	I was initially attracted by Manchester’s submission. However, it would be surprising if the very experienced district chairman who constituted the tribunal had made so basic an error and, on closer reading of the statement, I have concluded that he did not in fact do so. It would certainly have been preferable for the tribunal to have said in as many words that the overpayment was caused by official error but I am satisfied that the first paragraph quoted above was intended as—and amounts to—a finding that there was an official error by the Revenue. The tribunal clearly believed the fact that there had been an overpayment of tax credits was relevant to his decision and that fact would only be relevant on the basis that it demonstrated such an error.
10	On the view it took of the facts, the tribunal was clearly entitled to reach that conclusion. But establishing an official error by the Revenue is not the end of the matter. The fact that such an error occurred does not assist the claimant unless that error caused the overpayment. The tribunal appears to have assumed that this was the case but it was not: it does not follow from the fact that the Revenue’s error caused the overpayment of tax credits that it also caused the overpayment of HB and the excess payment of CTB. That is because of the way in which income from tax credits is taken into account when calculating HB and CTB.
Tax credits and HB/CTB
11	Tax credits are not awarded and paid in the same way as social security benefits. Anyone reading this decision is likely to be familiar with the standard social security procedures in which a benefit is claimed, a decision maker decides whether the claimant is entitled and the rate of any entitlement and then payment is made on the basis of that entitlement. Such procedures have an obvious advantage in those circumstances—such as the present—where the rate of entitlement to one benefit depends on the rate of entitlement to another, namely that the rate at which the claimant is entitled to the latter benefit will be known at the time the decision about his entitlement to the former is made. And if the claimant’s entitlement to the latter benefit changes retrospectively, it is relatively easy to adjust entitlement to the former by generating an under- or overpayment.
12	The procedure for tax credits is different. It has to be because, unlike social security benefits where—at least in theory—entitlement is assessed on a daily or weekly basis, entitlement to tax credits is assessed by reference to a complete tax year (or to that part of the tax year that occurs after the effective date of the claim). Therefore the claimant’s entitlement can only be decided after the end of that tax year, i.e., once her income for the year as a whole is known.
13	What happens when a claim for a tax credit is first made is that the Revenue makes an ‘initial decision’ under section 14 of the Tax Credits Act 2002. That decision is described in section 14(1) as being ‘(a) whether to make an award of the tax credit, and (b) if so, the rate at which to award it’. If the Revenue becomes aware of a change in the claimant’s circumstances during the tax year then that award may be revised under sections 15 or 16.
14	For the reasons already given, such an award does not confer any entitlement to tax credits: it is a decision to pay tax credits (in effect) on account of any entitlement that the claimant may, in due course, be found to have.
15	At the end of the tax year, the Revenue gives the claimant a ‘final notice’ under section 17 and then, when the claimant has reported any changes in her circumstances during the year, makes a ‘decision after final notice’, under section 18. It is at that decision that establishes whether the claimant was entitled to the tax credit and, if so, at what rate.
16	Such a system creates obvious difficulties when tax credits then have to be taken into account as income for benefits such as HB and CTB that are assessed and paid on a weekly basis. Until the decision after final notice has been taken, any tax credits awarded by the initial decision are, at most, a provisional estimate of the claimant’s eventual entitlement. In the meantime neither the claimant, nor the Revenue, nor the local authority know whether the claimant is entitled to tax credits at all or, if she is, the rate at which she is entitled. In particular, that entitlement may be affected by events that have not yet happened. For example, if a claimant takes a well-paid job during the second half of a tax year, her income may extinguish any entitlement to tax credits that would otherwise have arisen from her circumstances during the first half of that year. Depending on when the claim for HB and CTB is made, the decision on entitlement to tax credits may be 15 months or more in the future. The claimant’s rent, however, will be due at the beginning of the week or of the month and her council tax will be due immediately. HB and CTB have to be paid within a reasonable time so that the claimant is able to meet those liabilities.
17	For those reasons, it is not practicable for a claimant’s income to be assessed for HB and CTB purposes on the basis of her entitlement to tax credits. The only other options are that income from tax credits should disregarded or that it should be taken into account at the rate at which it is actually received under the initial decision (as revised from time to time) irrespective of whether that rate represents the claimant’s true entitlement. The law has chosen the latter option—see the decision of Mr Commissioner Lloyd-Davies in CH/1450/2005 and, in particular, paragraph 4 of that decision. This can be justified on the basis that HB and CTB are weekly benefits and the amount of tax credit that is available to the claimant for any particular week is the amount actually paid in respect of the period that includes that week.
18	In many cases, assessing a claimant’s income on the basis of the tax credits that are received will have the same result over time as assessing it on the basis of the tax credits to which she is entitled. This case may be an example. If, as the claimant told the tribunal, she was overpaid £1,400.00 in tax credits as a result of the Revenue’s errors, then that overpayment will probably have been recovered by reducing future payments of tax credit. If so, that would reduce the amount of tax credits she actually received during the recovery period with the effect that her housing benefit and council tax benefit would be higher than it would otherwise have been—see regulation 33(3AA) of the HB Regulations. I accept that some claimants will be worse off: the obvious example is a claimant who is on HB and CTB while she is being overpaid tax credits but has ceased to claim them during the period in which that overpayment is being recovered. Unfortunately, the alternative would be to wait until the decision after final notice before awarding HB and CTB to a claimant who was in receipt of tax credits. The delay involved in that alternative would lead to such substantial arrears of rent and council tax that it would deprive the HB and CTB schemes of much of their practical value.
19	It follows from what I have said in the last few paragraphs that whether or not the claimant’s awards of tax credit accurately reflected the figures she had given the Revenue was irrelevant to her entitlement to HB and CTB. As all such awards are merely provisional there is only a limited sense in which they can be said to be correct or incorrect until the decision after final notice has been given. For HB and CTB, the claimant’s income included the sums that she was actually awarded and paid by way of tax credits, even if those awards were based on figures that were not correct and were therefore not good estimates of her eventual entitlement. And as the correctness of the tax credit awards was irrelevant to the rates at which the claimant was entitled to HB and CTB, it must follow that any mistakes made by the Revenue when calculating those awards did not cause the Overpayments.
20	For those reasons, the tribunal was wrong in law to conclude that the Revenue’s official error caused the Overpayments and I must be set his decision aside. This is clearly an appeal in which it is appropriate for me to substitute my own decision and I give my findings of fact and reasons for that decision below.
21	Before I do so, however, there is one further aspect of the tribunal’s decision on which I must comment. It is implicit in the tribunal’s reasoning that it was permissible or reasonable for the claimant to withhold from Manchester those tax credit awards she considered to be incorrect. That is not the case. It was for Manchester—not the claimant—to decide how the changes in the tax credit awards would affect her HB and CTB. Under regulation 75 of the HB Regulations and regulation 65 of the CTB Regulations, the claimant was under a legal duty to notify Manchester of any change in her circumstances that she might reasonably have been expected to know might affect her right to, or the amount of, HB and CTB. In this case, the changes in the amount of tax credits she was receiving were within the scope of that duty. If the claimant believed the tax credit awards to be incorrect, her proper course was to disclose them to Manchester and explain why she took that view. If she was then dissatisfied with Manchester’s decision she could appeal against it. What was not open to her was to do what she did, namely to pick and choose which tax credit awards she should tell Manchester about. It is unfortunate that the tribunal’s decision implies the contrary.
Findings of fact
22	I make the following fresh findings of fact on a balance of probabilities:
(a)	The claimant was born in February 1977 and was therefore 28 at the date of Manchester’s decision. It follows that her entitlement to HB and CTB is regulated by the standard HB and CTB Schemes and not by the modified Schemes that applied to those over 60 from 6 October 2003.
(b)	The claimant has a son, who was born in October 2002. Immediately before the events that gave rise to this appeal, she was in receipt of income support (‘IS’) as a lone parent. On the basis of her entitlement to IS, she also received HB and CTB from Manchester, and child tax credit (‘CTC’) from the Revenue.
(c)	The house where the claimant has lived since November 2002 is rented from Manchester. Therefore her HB (and also, of course, her CTB) is paid as a rebate to her rent (or council tax) account.
(d)	In July 2003, the claimant was offered, and accepted a job. That job required her to work for 16 hours a week, which meant that she would no longer be entitled to IS. Under the law as it stood at the time, the cessation of IS meant that her entitlement to HB and CTB would also automatically come to an end. Therefore, while she was still on IS but in anticipation that she would shortly cease to be so, the claimant made a claim for working tax credit (‘WTC’) and fresh claims for HB and CTB.
(e)	The claimant says that she claimed WTC on 16 July 2003. Although nothing turns on the point, I believe her to be mistaken about that date because, on 17 July 2003, the Revenue wrote to her and notified her of an award of CTC and WTC for the 2003/2004 tax year. I will refer to that award as Award 1. Award 1 was a decision to pay the claimant £2,269.67 in CTC and £189.43 in WTC. It was made on the express basis that the claimant was in receipt of a qualifying benefit, namely IS. In other words, Award 1 reflected the claimant’s circumstances as they were before she started work and not as they would be after she had done so.
(f)	The fresh claims for HB and CTB were made on 21 July 2003. In the claim form, the claimant explained (among other things) that she would be starting her new job on 22 July (i.e., the following day), that she had previously been on IS but had claimed WTC and was waiting to hear from the Revenue and would forward the award letter when she received it (I accept that when she submitted her HB/CTB claim, the claimant had not received the letter notifying her of Award 1). She also stated (page 9) that she did not ‘pay for childcare for children under 15 … while [she was] at work’
(g)	On 22 July 2003, the claimant started work for a bank.
(h)	On 25 July 2003, the Revenue wrote to the claimant and notified her of an increase in the rates at which CTC and WTC would be paid for 2003/2004(Award 2). The annual rate of CTC increased from £2,269.67 to £5666.52 and the annual rate of WTC increased from £189.43 to £2,339.63. The letter stated that Award 2 had been calculated on the basis that the claimant had an annual income of £5,060 and that she had no qualifying child care costs.
(i)	The increase in the claimant’s CTC and WTC as a result of Award 2 was a change in her circumstances that she might reasonably have been expected to have known might affect her right to, or the amount of, HB and CTB. The claimant was therefore under a legal duty to notify Manchester of that change by virtue the regulations cited at paragraph 21 above.
(j)	On 29 July 2003, the Revenue wrote again to the claimant and notified her of another award of CTC and WTC for 2003/2004 (Award 3). Award 3 was exactly the same as Award 2 except that the claimant was now said to have qualifying childcare costs of £135 per week. Award 3 appears to have been issued because it had been decided that, from 8 September 2003, WTC would be paid by the claimant’s employer through her wages rather than directly to her bank account, as had previously been the case.
(k)	On 6 August 2003, the claimant attended Manchester’s offices and produced the letter from the Revenue notifying her of Award 1. She did not produce the letters notifying her of Award 2 or Award 3 but I am prepared to accept that she had not received either of those letters by 6 August.
(l)	On a balance of probabilities the claimant did receive both those letters shortly after 6 August. However, she did not notify Manchester of either letter until copies were provided under cover of her letter dated 23 August 2005.
(m)	On 2 October 2003, the claimant provided Manchester with copies of her payslips for August and September 2003. By this time, she had received the letters notifying her of Award 2 and Award 3 and she could have taken the opportunity to disclose them. She did not do so.
(n)	However, the payslip for September 2003 disclosed that the claimant’s employer had paid her £156.17 in tax credit for that month. At the time, employers were responsible for the payment of WTC, but not of CTC. Therefore the fact that the claimant had been paid £156.17 in tax credit for a single month was therefore inconsistent with the annual rate of £189.43 that was notified in Award 1.
(o)	On 10 October 2003, Manchester notified the claimant that she had been awarded HB at the weekly rate of £34.51 for the period from 28 July 2003 (i.e., the beginning of the first benefit week after her claim on 21 July 2003) until 4 April 2004 and CTB at the weekly rate of £7.69 for the period from 28 July 2003 to 31 March 2004. That award was based on the claimant’s wages as disclosed in her payslips and on her income from CTC and WTC as set out in Award 1.
(p)	For Manchester to have based the awards of HB and CTB on Award 1 was a mistake. Award 1 stated unequivocally that it was made on the basis that the claimant was in receipt of IS. Manchester knew full well (because the claimant had told them in her claim form and by virtue of the sums shown on the claimant’s payslips) that that was no longer the case. Manchester’s computer system correctly recorded the claimant as not being in receipt of IS at the time (see the entry ‘IS: N’ towards the top right-hand corner of page 26). Further Manchester knew that the amount of WTC that the claimant’s employers had paid her for September and should have realised that that amount and the amount set out in Award 1 could not both have been correct. This was a new claim for benefit (so no question of suspension arose) and Manchester were not obliged to make any decision at all—far less award benefit—on the basis of unsatisfactory information. They should have queried both discrepancies with the claimant or the Inland Revenue or both. It was plainly a mistake for Manchester not to have done so and I reject their submission to the contrary.
(q)	On 13 March 2004, Manchester notified the claimant that they had superseded the decisions notified on 10 October 2003. The superseding decisions were that the claimant was entitled to HB at the weekly rate of £37.48 for an indefinite period starting on 5 April 2004 and CTB at the weekly rate of £6.77 for an indefinite period starting on 1 April 2004. Those awards reflected the annual uprating in social security benefits and, presumably, also annual changes in the rent and council tax that the claimant was liable to pay the council. However, they were based on the same income figures as the awards notified on 10 October 2003 and therefore perpetuated the mistakes by Manchester that I identify at (p) above.
(r)	The awards notified on 13 March 2004 were made for an indefinite period because, with effect from 5 April 2004, finite “benefit periods” were abolished by the Housing Benefit and Council Tax Benefit (Abolition of Benefit Periods) Amendment Regulations 2004 (‘the 2004 Regulations’).
(s)	On 1 May 2004, Manchester notified the claimant that they had revised the decisions notified on 13 March 2004. The revised decisions were that the claimant was entitled to HB at the weekly rate of £45.81 for an indefinite period starting on 5 April 2004 and CTB at the weekly rate of £9.23 for an indefinite period starting on 1 April 2004. The original decisions were revised in order to include a new weekly earnings disregard for WTC that had not previously been taken into account. However, they were based on the same income figures as the awards notified on 10 October 2003 and therefore perpetuated the mistakes by Manchester that I identify at (p) above.
(t)	On 10 May 2004, the Revenue wrote to the claimant and notified her of awards of CTC and WTC for 2004/2005 (Award 4). The new award of CTC was £7,089.40 and the new award of WTC was £2,898.01. The letter stated that Award 4 had been calculated on the basis that the claimant had an annual income of £5,662.00 and that she had qualifying childcare costs of £135 per week.
(u)	The increase in the rates at which the claimant was being paid CTC and WTC as a result of Award 4 was a change in her circumstances that she might reasonably have been expected to have known might affect her right to, or the amount of, HB and CTB. Therefore the regulations cited at paragraph 21 above imposed a legal duty on her to notify Manchester of the change. However, the claimant did not notify Manchester of Award 4 until she sent them a copy of the award letter under cover of her letter dated 23 August 2005.
(v)	On 13 July 2004, the Revenue wrote to the claimant and notified her of a change in her awards of CTC and WTC for 2004/2005 (Award 5). The new award of CTC (including the childcare element of WTC) was £4,832.60 and the new award of WTC was £3,120.75. The letter stated that Award 5 had been calculated on the basis that the claimant had an annual income of £5,060.00 and that she had qualifying childcare costs of £73 per week.
(w)	The change in the rates at which the claimant was being paid CTC and WTC as a result of Award 5 was a change in her circumstances that she might reasonably have been expected to have known might affect her right to, or the amount of, HB and CTB. Therefore the regulations cited at paragraph 21 above imposed a legal duty on her to notify Manchester of the change. However, the claimant did not notify Manchester of Award 5 until she sent them a copy of the award letter under cover of her letter dated 23 August 2005.
(x)	On 21 July 2004, the Revenue wrote to the claimant and notified her of a change in her award of CTC for 2004/2005 (Award 6). The new award of CTC (including the childcare element of WTC) was £4,996.40. The award of WTC remained unchanged at £3,120.75. The letter stated that Award 6 had been calculated on the basis that the claimant had an annual income of £5,060.00 and that she had qualifying childcare costs of £77.50 per week.
(y)	The change in the rates at which the claimant was being paid CTC as a result of Award 6 was a change in her circumstances that she might reasonably have been expected to have known might affect her right to, or the amount of, HB and CTB. Therefore the regulations cited at paragraph 21 above imposed a legal duty on her to notify Manchester of the change. However, the claimant did not notify Manchester of Award 6 until she sent them a copy of the award letter under cover of her letter dated 23 August 2005.
(z)	On 1 September 2004, the claimant started a new job with a housing association at an increased wage.
(aa)	On 7 September 2004, Manchester sent the claimant a review form to complete. On a balance of probabilities, this was because—as the claimant maintains—she had telephoned Manchester to advise them of her new job.
(bb)	On 27 September 2004, the Revenue sent the claimant two letters. The first confirmed her entitlement to tax credits for 2003/2004 at the rates specified in Award 2. The second (Award 7) notified her of a decrease in the rate at which she was to be paid WTC for 2004/2005 to £2,898.01. The rate of CTC remained unchanged at £4,996.40. Award 7 was based on an annual income of £5,662.00 and qualifying childcare costs of £135.00.
(cc)	The decrease in the rate at which the claimant was being paid WTC as a result of Award 7 was a change in her circumstances that she might reasonably have been expected to have known might affect her right to, or the amount of, HB and CTB. Therefore the regulations cited at paragraph 21 above imposed a legal duty on her to notify Manchester of the change. The claimant notified Manchester of Award 7 when she handed the award letter to the visiting officer on 11 October 2004 (see (ff) below).
(dd)	The claimant believed that Awards 2 to 6 were wrong for the following reasons
i)	Awards 2, 3, 5 and 6 gave her annual income as £5,060 rather than £5,662.
ii)	Award 2 appeared not to include any allowance for childcare costs.
iii)	Awards 3 and 4 were based on weekly childcare costs of £135 rather than £77.50;
iv)	Award 5 was based on weekly childcare costs of £73 rather than £77.50.
I accept that those errors occurred and that the claimant did not cause or contribute to them in any way. Therefore the errors amounted to official errors by the Revenue.
(ee)	Award 7 did not contain any errors but, by the time it was issued, it was out of date because of the claimant’s new job.
(ff)	On 11 October 2004, an officer from Manchester visited the claimant at home. On that occasion, the claimant declared the existence of her new job, the increase in her earnings, the true rates at which CTC and WTC were being paid and the fact that she had childcare charges.
(gg)	Thus, the claimant did not disclose any change in her tax credit awards between 6 August 2003 (when she disclosed Award 1 at Manchester’s offices) and 11 October 2004 (when she disclosed Award 7 to the visiting officer). That was despite the fact that at times during the period her CTC was being paid at more than three times the rate she had declared (£7,089.40 pa as against £2,269.67) and her WTC was being paid at more than sixteen times the rate she had declared (£3,120.75 pa as against £189.43 pa). Even if one accepts the fact that the Awards 2 to 6 were wrong as being relevant to the claimant’s entitlement to HB, it was inconceivable that the errors identified by the claimant (see 22(cc) above) would have made such a large difference to the claimant’s entitlement. In this respect, it is instructive that when an award was made using the correct figures (Award 7) the remedying of those errors did not affect the claimant’s CTC at all (it remained at £4,996.40) and reduced her WTC by £222.74 over the year as a whole (£3,120.75 - £2, 898.01), which is equivalent to a reduction of £4.28 per week. I therefore find that when she received Manchester’s letters notifying her of the awards that led to the Overpayments, the claimant could reasonably have been expected to realise that she was definitely being overpaid both HB and CTB.
(hh)	After 11 October 2004, Manchester took steps to ensure that in future, the HB and CTB would reflect the true level of the claimant’s wages and the true rates at which tax credits were being paid to her. They also took a number of revising and superseding decisions, which had the effect that the claimant’s entitlement to HB and CTB was reassessed at considerably lower rates from 28 July 2003. The result was that Manchester decided the claimant had been overpaid as set out in paragraph 1 above and that the Overpayments were recoverable from her. There was a certain amount of correspondence about the detail of the revised and superseding awards but it is unnecessary for me to make findings of fact about the process that led to the overpayment decisions because the amount of the Overpayments is not in dispute.
(ii)	Manchester made its final decisions about the Overpayments on 14 September 2005 and the claimant appealed against those decisions on 5 October 2005.
Reasons for the Commissioner’s decision
23	At the time of Manchester’s decision, the recoverability of overpayments of HB and excess payments of CTB was governed by regulation 99 of the HB Regulations and regulation 84 of the CTB Regulations. Those regulations were in very similar form and I shall therefore explain my reasons by reference to regulation 99 only.
24	At the relevant time, regulation 99 read as follows:
‘Recoverable overpayments
99.—(1) Any overpayment, except one to which paragraph (2) applies, shall be recoverable.
(2)	Subject to paragraph (4), this paragraph applies to an overpayment caused by an official error where the claimant or a person acting on his behalf or any other person to whom the payment is made could not, at the time of receipt of the payment or of any notice relating to that payment, reasonably have been expected to realise that it was an overpayment.
(3)	In paragraph (2), "overpayment caused by official error" means an overpayment caused by a mistake made whether in the form of an act or omission by—
(a)	the relevant authority;
(b)	an officer or person acting for that authority;
(c)	an officer of—
(i)	the Department for Work and Pensions;
(ii)	the Commissioners of the Inland Revenue
acting as such; or
(d)	a person providing services to the Department or to the Commissioners referred to in (c)
where the claimant, a person acting on his behalf or any other person to whom the payment is made did not cause or materially contribute to that mistake, act or omission.
(4)	Where in consequence of an official error, a person has been awarded rent rebate to which he was not entitled or which exceeded the benefit to which he was entitled, upon the award being revised any overpayment of benefit, which remains credited to him by the relevant authority in respect of a period after the date on which the decision took place, shall be recoverable.’
25	Thus the starting point for my decision is the general rule in regulation 99(1) that all overpayments of HB are recoverable. Unlike the rules for the benefits administered by the Department for Work and Pensions, it is not a necessary condition of recovery that the claimant shoud have misrepresented or failed to disclose some material fact. On the contrary, unless the circumstances of the case fall within the exception in regulation 99(2), the mere fact that HB has been overpaid means that it is recoverable.
26	For that exception to apply, it is necessary that (on the facts of this case):
(a)	there should have been a mistake by Manchester or the Revenue; and that
(b)	the claimant did not cause or materially contribute to that mistake;
(c)	the Overpayments were caused by the mistake; and that
(d)	the claimant could not reasonably have been expected to realise at the specified time that the payments she received were overpayments.
27	Applying those tests, I have no hesitation in deciding that the Overpayments are recoverable because:
(a)	there has been no official error by Manchester in this case;
(b)	there has been an official error by the Revenue but, for the reasons I have already given at paragraphs 11 to 19 above, that error did not cause the Overpayments;
(c)	even if I am mistaken and there was an official error by Manchester, that error did not cause the Overpayments; and
(d)	even if I am doubly mistaken and there was an official error by Manchester and it caused the Overpayments, the claimant could reasonably have been expected to realise that she was being overpaid.
28	To elaborate
(a)	I have found (at paragraphs 22(p), (q) (s) above) that Manchester made mistakes when it made the awards that led to the overpayments. There was information available to it, on which it should have acted but did not, that plainly showed the figures it was using for the claimant’s tax credits were incorrect.
(b)	However, those mistakes did not amount to official errors because they were caused by the claimant or, at any rate, because the claimant materially contributed to them.
I am conscious that I have not heard oral evidence from the claimant and that the tribunal did so. Nevertheless I am unable to agree with the tribunal that her account of events can be accepted without reservation, not least because her version of events is inconsistent with the documentary evidence that she herself produced. In particular,
i)	The claimant told the tribunal that she was “getting a new award of WFTC [sic] almost every week”. That was a gross exaggeration. For the period from 17 July 2003 to 26 July 2005 (105 weeks and five days) the claimant has produced ten letters from the Revenue. Manchester’s enquiries of the Revenue have not revealed any additional ones. That approximates to a rate of one letter every 11 weeks, not one almost every week. The only letters that were sent within a week of each other were those notifying Award 2 and Award 3.
ii)	The claimant told the tribunal that ‘the WFTC [sic] awards I thought were correct I sent on to [the] L[ocal] A[uthority]’. Crucially for my decision, that also is incorrect. The claimant did not disclose any change in her tax credits between 6 August 2003 and 11 October 2004—see my finding at paragraph 22(gg) above—because she believed all the tax credit awards that she received during that period to be wrong and because Award 7, though correct, had been overtaken by events because, in the meantime, the claimant had started a new job at a higher wage.
I have therefore concluded that the claimant’s failure, in breach of her legal duty, to notify Manchester of the changes in the rates that she was paid tax credits as and when they occurred—and, in particular, her failure to give prompt disclosure of Awards 2 and 3—caused the mistakes by Manchester. If Manchester had been provided with a copy of Award 2 or 3 then, on a balance of probabilities, it would not have based its calculations on the incorrect figures in Award 1 or failed to spot the fact that the claimant’s September payslip was inconsistent with Award 1. In the latter respect, it is relevant that Award 3 specifically refers to the fact that WTC would be paid by the claimant’s employer from 8 September 2003.
(c)	Even if I had reached a different view about the existence of an official error, I would nevertheless have taken the view that the overpayment was caused by the claimant’s failure to notify Manchester of the changes in her tax credits rather than by the oversights that occurred when Manchester processed her claim: see R (Sier) v Housing Benefit Review Board of Cambridge City Council, 8 October 2001, (CA, Simon Brown, Mantell & Latham LJJ) [2001] EWCA Civ 1523.
(d)	Even if I am wrong about both the existence of an official error and about the causation of the payment, the effect of my finding of fact at paragraph 22(gg) above (i.e., that the claimant could reasonably have been expected to realise that she was definitely being overpaid both HB and CTB) is that the Overpayments would still be recoverable from her.
29	In summary, Manchester did not make an official error and, although the Revenue did make such an error, that error did not cause the Overpayments. In those circumstances, the law relating to HB and CTB requires me to hold that the Overpayments are recoverable. Moreover, the true cause of the Overpayments was the claimant’s failure to report the changes in her tax credits and, even under the more generous law that applies to other social security benefits, she would still have to pay them back.
The abolition of benefit periods
30	At one point in these proceedings, I believed that the technical provisions of the 2004 Regulations (which, it will be remembered abolished benefit periods from 5 April 2004) might be of relevance to this appeal. I took that view because the initial award of benefit was made for a finite period ending on Sunday 4 April 2004. The 2004 Regulations, revoked the regulations that gave local authorities power to make awards of HB and CTB for a finite period. However, they did not contain any provision that converted a finite award which had been validly made under that power, and which expired before 5 April 2004, into an indefinite award. On the contrary, the transitional provisions in regulation 26 of the 2004 Regulations would be otiose if that was the case. I therefore formed the provisional view that, as she had not made a fresh claim from 5 April 2004, the claimant might not have been entitled to HB or CTB at all from that date. In those circumstances, Manchester would have been obliged to invite the claimant to make a fresh claim and to decline to pay further benefit until she did so. As Manchester in fact continued to pay the claimant as if her award had become indefinite, I considered it possible that, to the extent that they related to periods on or after 5 April 2004, the Overpayments might have been caused by official error and might therefore be irrecoverable.
31	I am now satisfied that that was not so. The awards of benefit notified on 10 October 2003 started from the benefit week commencing with Monday 28 July 2003. As the claimant did not satisfy the conditions set out in the former regulation 66(4) of the HB Regulations and 57(4) of the CTBRegulations, the maximum benefit period under those awards was 60 weeks and the latest date on which they could have ended was therefore Sunday 19 September 2004. Manchester initially chose not to award the maximum benefit period but to bring the awards to an end in March and April 2004 to coincide with the annual up-rating of benefits and the annual changes in council tax and local authority rents. However, on 13 March 2004—before the benefit periods had ended—Manchester superseded the decisions awarding benefit so as to continue the awards at different rates from 5 April.
32	That was a valid exercise of Manchester’s powers of supersession. It is true that the decisions notified on 13 March 2004 were technically defective because they were expressed to be for an indefinite period and—as regulations 66 of the HB Regulations and 57 of the CTB Regulations were still in force on 13 March 2004—there was as yet no power to make an indefinite award on that date. However, that defect was remedied by the revision on 1 May 2004, by which time benefit periods had been abolished.
33	Finally, I should mention the Secretary of State’s submission that, had the claimant had a finite award of benefit that ended after 5 April 2004, the 2004 Regulations would have had the effect of making that award indefinite. It is not necessary for me to rule on that submission in this appeal and I do not do so. It is preferable that the point should be decided in a case in which it affects the outcome, particularly as there may now never be such a case.
Conclusion
34	For those reasons, my decision is as set out at paragraph 1 above.

(Signed on the original)

Richard Poynter
Deputy Commissioner
29 February 2008

CH/2456/2006