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Case studies

We have collected together some case studies which illustrate the work that we do and demonstrate how complaints are resolved.

HM Revenue & Customs (HMRC)

Case study 1: Recovery of an overpayment where the parties have separated
Case study 2: Overpayments of Tax Credits
Case study 3: Main responsibility for qualifying child
Case study 4: Inappropriate disclosure of information
Case study 5: Underpayment of tax across several years
Case study 6: Underpayment of tax
Case study 7: HMRC Enquiry

Valuation Office Agency (VOA)

Case study 8: Payment of interest on refunded council tax payments
Case study 9: Claim for interest and agents fees

Case Study 1: Recovery of an overpayment where the parties have separated


Mr A was unhappy about the TCO's decision to recover overpaid tax credits from him.

Whilst Mr A did not dispute the actual overpayment incurred in relation to the joint claim he made with his former wife, he felt that the TCO should not seek recovery from him.

He claimed not to have received any of the tax credit payments made because they were paid directly into his former wife's single account and he did not have access to this. He felt the overpayment should be recovered entirely from his former wife.

However, whilst the TCO sought clarity about the actual date of separation, they also paid both claimants individually.


The Adjudicator did not uphold this complaint.

The overpayments were caused by the TCO's mistake in not correctly recording income information which Mr A and his former wife had provided to them. Award notices were issued showing incorrect information. However, in order to meet the responsibilities under COP 26, Mr A should have contacted the TCO within 30 days of receiving the award notice to notify them that the information on the notice was wrong.

Mr A and his former wife failed to do so and in the Adjudicator's view, they too had not fulfilled their responsibilities under COP 26.

With regard to liability for repayment of an overpayment, the Adjudicator explained that when a joint claim is made, claimants nominate an account to receive payments. The declaration, which is signed by both parties, holds them both responsible for repaying any overpayment.

The Adjudicator did not concur with Mr A's view that he should not be partly responsible for repaying the overpaid tax credits, more so as he had received some of the money directly.

However, since 21 September 2009, new TCO guidance regarding the recovery of an overpayment following a household breakdown, stipulates that the TCO will not seek to recover more than 50% of the outstanding overpayment from either party.

Consequently, the TCO confirmed that, in the absence of an agreement between Mr A and his former wife for repaying the overpayment, the TCO will seek to recover half of the overpayment from each of them.

The Adjudicator said that this was reasonable and in line with the HMRC guidelines.


The TCO accepted that they had made mistakes and paid Mr A compensation in recognition of this. However, the Adjudicator recommended additional redress to acknowledge the service failure issues in recording inaccurate personal details for the customer, coupled with the worry and distress suffered.

She asked that TCO staff ensure a higher degree of accuracy when entering personal data for customers on their systems.

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Case Study 2: Overpayments of Tax Credits


An overpayment occurred because the TCO said that Mr and Mrs B did not respond fully to the Annual Declaration for 2003/2004.

As a consequence their award was terminated, and all payments for 2004/2005 considered an overpayment.

However, Mr and Mrs B had in fact responded to the Statement of Account, but the TCO failed to reinstate the award.

Another overpayment occurred for 2006/07 because Mr and Mrs B had indicated that Mr B was in receipt of Income Support (IS): however his claim for IS was unsuccessful but he did not inform the TCO of this.


The Adjudicator partially upheld this case

A Statement of Account was issued in February 2005 and Mr and Mrs B responded to this within 30 days, therefore, their claim should have been restored at this stage, but it was not. The TCO accepted they made a mistake by not reinstating the claim.

The claim was subsequently reinstated and as a result, Mr and Mrs B were owed tax credits for 2005/2006 and 2006/2007. However their claim was ‘stuck' in a processing queue and payments could not be issued.

The TCO offered to make manual payments in October 2008. Initially Mr and Mrs B decided to wait until the system problem was resolved; but, during the course of the investigation into their complaint they changed their minds and requested the payments. The TCO said that they were awaiting new guidance and therefore unable to issue payments at that time.

Mr and Mrs B asked for the remaining 2006/07 overpayment to be given up in light of exceptional circumstances, primarily because of Mr B's ill health. After very careful consideration of the potential exceptional circumstances of this case the Adjudicator concluded that Mr and Mrs B had demonstrated a reasonable level of ability to manage their own affairs. They had continued to apply and deal with a number of issues relating to their claims for benefits during the period of his illness and she considered that it was not unreasonable to expect Mr and Mrs B to able to contact the TCO to advise them that Mr B was not in receipt of IS.

The Adjudicator reached the view that Mr and Mrs B should repay the 2006-07 overpayment and TCO should pay the outstanding money for earlier years.


The Adjudicator wrote to the Director of the TCO expressing her concerns about the delay in making manual payments for 2005/06 and 2006/07. She said that, in her view, it was unreasonable for monies legitimately due, and owed for several years in this case, to be withheld because of a computer system fault. Particularly, as it would appear that a previous offer of payment had been withdrawn.

The TCO accepted that they had made mistakes and not handled the complaint well. They offered to make a redress payment which the Adjudicator considered to be reasonable.

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Case Study 3: Main responsibility for qualifying child


The TCO determined that Mr C had the main responsibility for his son. However, they subsequently amended this decision and noted their records to show that he did not have main responsibility for his son. The tax credits he had received were therefore classed as an overpayment.

Later Mr C advised the TCO that there was a new court order giving joint responsibility to each parent. The TCO reinstated their records to show that Mr C was entitled to tax credits from the date of the court order and started to make payments to him.


The Adjudicator upheld this complaint.

The Adjudicator has no involvement in deciding who has main responsibility, for tax credit purposes, for a child. Such matters are considered on appeal by an independent tribunal.

However, during the course of investigating Mr C's complaint the TCO established that the decision to re-instate Mr C's entitlement had been made without following correct procedures. After taking into account information from both Mr C and his former partner, TCO decided that Mr C did not in fact have main responsibility for his son for tax credit purposes and that he had been overpaid.

Having reviewed the circumstances surrounding how Mr C's overpayments arose the TCO decided that he would not need to pay them back. The TCO accepted they did not follow their own procedures in seeking further information about the main responsibility for the child at the appropriate time.

The TCO also offered to make a redress payment to recognise the worry and distress, delays and direct costs.


The TCO should have made further enquiries with both Mr C and his former partner in order to establish which of them, for tax credit purposes, had main responsibility for their son. This should have been done before amending their records.

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Case Study 4: Inappropriate disclosure of information

Mr and Mrs D complained that their customer records had not been updated, their claim had been stopped incorrectly and there had been an inappropriate disclosure of information.


The Adjudicator often sees cases where a number of issues affect the overall standing of a claim.

In this case, the TCO incorrectly amended Mr and Mrs D's personal circumstances which resulted in their awards being terminated from the start of their claim.

Mr and Mrs D received demands for repayment of all of the money that they had received. Whilst Mr and Mrs D continued to be entitled to tax credits they did not receive any further payments.

Mr and Mrs D were also unhappy with the explanations given to them by the TCO.


The Adjudicator upheld this complaint.

The Adjudicator felt that the TCO's explanations of how they had handled Mr and Mrs D's affairs had been 'minimal and confusing'. There had also been an inappropriate disclosure of information as a letter Mr and Mrs D had written to the TCO had been sent to an unconnected party. In addition the TCO failed to make manual payments to Mr and Mrs D as promised, failed to respond to some letters and included inaccurate details in some of their replies.

Mr and Mrs D were overpaid tax credits for 2003/04, 2004/05 and 2005/06 due to the level of their household income. However, Mr and Mrs D had received a letter from the TCO which said that 'when the system updates you will not have an overpayment showing on your award'. As a result the TCO agreed that it would be wrong to expect Mr and Mrs D to repay the remaining overpayments.

In addition, Mr and Mrs D had a continuing entitlement to tax credits, but, because the TCO had terminated their claim, an underpayment had occurred for 2006/07. The Adjudicator supported the TCO's decision not to recover the remaining overpayments, and to pay the underpayment.

Mr and Mrs D were unhappy with the level of compensation previously offered by the TCO. The Adjudicator considered this carefully alongside an increased offer from the TCO in recognition of the poor service, in particular the inappropriate disclosure of information. The Adjudicator explained to Mr and Mrs D that while payments of compensation may appear low, the money paid comes from the public purse and as such must be considered proportionate to the merits of each case.

The Adjudicator concluded that the increased sum offered by the TCO was reasonable.


The Adjudicator asked the TCO to issue a notice to all staff:
  • reminding them of the importance of ensuring individuals' papers are kept separate from other claimants to avoid letters becoming muddled; and
  • that TCO staff should always review, in detail, the information held for each customer and keep promises to take action

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Case Study 5: Underpayment of tax across several years


Mrs E retired from a civil service department in July 2002, at the age of 60, and started to receive a civil service pension along with a state pension.

Instead of setting up a record under the civil service pension reference, one was set up under an NHS pension reference, by mistake. Although Mrs E contacted HMRC twice in February 2003, and advised them that she was receiving a pension from the civil service and not the NHS, they did not update their records.

This meant that coding notices were sent to the wrong pension provider. Coding notices were also issued directly to Mrs E over a period of time still showing incorrect information about the pension; however, she did not contact HMRC again. The mistake was not discovered until Mrs E was sent a form P161 prior to her approaching the age of 65.

A large underpayment of tax had arisen across several years because the pension provider operated an emergency tax code and did not collect the correct amount of tax.

Mrs E said that the tax underpayments had arisen because of HMRC's mistakes, and she believed that they should not collect the tax involved. HMRC accepted that they had made mistakes; however, they did not believe the underpayments should be given up under the Extra Statutory Concession A19, because they considered that Mrs E could not reasonably have believed her tax affairs were in order when she continued to receive coding notices with incorrect details about her pension and provider.


The Adjudicator substantially upheld this complaint.

The Adjudicator said there was no doubt that HMRC were at fault and had failed to act on information supplied.

Mrs E was sent a payment in recognition of HMRC's poor handling and the Adjudicator considered that this was a reasonable resolution.


As formal assessments were not issued within the statutory time limits, the debts were not legally enforceable and the tax outstanding could not be collected.

HMRC should ensure that they follow their internal instructions for these types of cases as this meant that it was no longer necessary to consider Extra Statutory Concession A19.

This complaint could have been resolved at an earlier stage.

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Case Study 6: Underpayment of tax


Mr F's difficulties began when he retired and took a part time job in 2003. His PAYE personal allowances were duplicated for both sources of income.

In November 2006, Mr F received tax calculations for 2004/2005 and 2005/2006, showing significant amounts of tax owing. Mr F then instructed an accountant who wrote to HMRC, but HMRC took a long time to give a detailed reply.

When HMRC did respond, they explained that there were also arrears for 2002/2003 and 2003/2004 as it appeared his employer at the time may not have operated PAYE correctly. Later on, HMRC decided that the employer had applied PAYE correctly, so they asked Mr F to pay the shortfall.

HMRC said that they could not give up any of the arrears because, in their view, Mr F should have known his tax affairs were not in order.


The Adjudicator partially upheld this case and recommended that HMRC give up a large proportion of underpaid tax.

The Adjudicator's review of the circumstances of Mr F's case found that, for the two earliest years there was no evidence that HMRC's failure to act on information had caused arrears and therefore the Extra Statutory Concession ESC A19 did not apply.

For the two later years, however, the Adjudicator recommended that HMRC should not pursue the underpayments of tax as it was not reasonable to assume that Mr F should have been able to work out that he had not been paying enough tax, particularly as he had not received any tax codes for those years.


Staff should put themselves in the position of each individual taxpayer when considering the 'reasonable belief' element of ESC A19.

It is only by appreciating the customer's likely level of understanding of tax, and not making general assumptions, that staff will be able to apply the concession fairly and consistently for all of their customers.

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Case Study 7: HMRC Enquiry


Mr G complained that the request from HMRC for him to sign a Contract Settlement was premature as he had not been given the opportunity to formally appeal against the tax assessment and interest charges raised by HMRC.

Mr G also complained about the quality of the complaint handling process and level of redress offered by HMRC.


The Adjudicator partially upheld this complaint.

There was no evidence that HMRC had given misleading advice or that they had failed to refund tax which the complainant felt had been overpaid.

However, the Adjudicator identified failings in the way in which the Enquiry into the Tax Return had been handled and asked that the matter of interest be referred to the appropriate HMRC specialist unit.

HMRC set aside the Contract Settlement and issued new assessments and amendments giving Mr G an opportunity to formally appeal.

Having considered the facts of the case the Adjudicator did not recommend any increase in redress already offered by HMRC.


HMRC accepted there had been mistakes, in particular by asking Mr G to sign a Contract Settlement when it was clear that Mr G had not agreed to all of the terms of the contract.

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Case Study 8: Payment of interest on refunded council tax payments


Mr H complained to the Adjudicator about the VOA's refusal to pay interest on refunded council tax payments which he had received because the council tax band of his property had changed from band E to D.

Mr H said 'I believe it is clear that the VOA made a mistake'.


This case was mediated with Mr H on behalf of the Adjudicator.

Our complaint investigator listened to Mr H's point of view and then clarified the difference between a 'judgment' and a 'clear mistake' when making a property banding decision.

He explained that, under the terms of the VOA's own guidance, they will only award compensation to cover lost interest where there is clear evidence of a mistake or a delay. Our remit only extends to reviewing whether or not a department has followed its own guidance, and does not extend to criticising the guidance itself.

We found no evidence to suggest that the initial banding was a clear mistake in this case. When the property was initially banded there was no clear sales evidence on the complainant's property or a neighbour's property, and so the Listing Officer (the LO), who has the statutory responsibility for council tax bands, had to make a judgment based on the information available.

This information seemed to show that the properties were border-line between bands D and E, and as Mr H's property had a good quality conservatory, the LO decided band E was more appropriate for his property whilst placing his neighbour in band D.

A different decision was reached when Mr H asked for a review of the band, again demonstrating that an element of judgment is exercised when considering bands which are border-line.

In light of the discussions with our investigator, Mr H accepted that the VOA's decision not to award compensation in lieu of lost interest was in line with its own guidance, and the case was closed on that basis.

We did not see any areas of concern with how Mr H's complaint was handled.

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Case Study 9: Claim for interest and agents fees


The VOA had previously acknowledged that a mistake was made in the compilation of the 2000 Rating List and that, as a result of duplicated entries, Mr I was overcharged business rates by £40,205.

The VOA accepted that they had made a mistake and settled this aspect of Mr I's complaint before the case came to the Adjudicator.

However, the VOA did not agree that they should pay interest on the amount refunded to Mr I; neither should his agent's fees be met. The VOA felt there were opportunities for Mr I to mitigate the losses by carefully examining his rate demands and that he should have realised that he was being charged twice for his business.

Furthermore, there had been opportunities for Mr I to appeal against the duplicated entries during the lifetime of the Rating List.

Mr I was unhappy with the VOA's decision and his agent asked the Adjudicator to review it.


The Adjudicator substantially upheld this complaint.

The Adjudicator decided that the VOA's acceptance of responsibility for the mistake should also take into account the interest and professional fees incurred by Mr I in bringing his complaint. The overriding principle of the VOA's Code of Practice, 'Putting things right for you' is to restore taxpayers and ratepayers to the position they would have been in, had the mistake not occurred.

The VOA code does not mention payments of interest on refunded business rates payments. Usually, these are the responsibility of the local Billing Authority (BA) as there is scope, within the Non- Domestic Rating Legislation, to make payments of interest on refunds which are the result of reductions in rateable values.

However, the duplicated entry in the 2000 Rating List could not be amended or deleted: leaving no vehicle for the BA to consider a claim for interest.

The Adjudicator did not accept that the interest should be paid at the 8% level being claimed by Mr I. Instead she recommended that the interest should be calculated using the prevailing rates applied by legislation so that Mr I would be no better or worse off than if he had received the refund directly from the BA. The VOA agreed to pay the interest.

The Adjudicator also recommended that the VOA considered the claim for professional fees. The code of practice says that a complainant '...can claim any reasonable costs which you can show you have incurred' as a result of a mistake or unreasonable delay caused directly by the VOA. On reflection, the VOA also agreed to refund Mr I's agent fees.


The Adjudicator emphasised the need for consistency in complaint handling and felt that the VOA had not applied the code of practice appropriately.

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