CTC exceptional circs - failure to report change

My client lost or gave up responsibility for caring for her children a few years ago, and reported that change to HMRC. However, in an earlier interim period she was advised by social work not to report the change as it was unclear whether the children would return to her care. In that period she paid all CTC to the relatives caring for her children.
She is now pursued for an overpayment of ~£3000 for the interim period.

My client is a carer, and her only income is CA+IS, so I’m aiming for the hardship route to reduce recovery, but I’m wondering if the TC846 route could work?
It states ‘exceptional circumstances which meant you were unable to meet your responsibilities on time’ as a possible grounds - I think if the children had actually moved back in with my client and/or the interim period had been shorter she could go that way, but in the present circumstances I’m not so sure?

Provided the client can evidence it with bank statements etc, is there any merit to arguing against recovery on that basis? From what I understand the relatives were eligible to claim CTC in that period but only did so after the move was finalised/settled.

Hi Va1der

It seems worth trying all available routes. You may well have done so already, but is it first worth looking at a possible MR/appeal against the decision (using form WTC/AP), on the grounds that she was still entitled to CTC up to a later date, as the children were still “normally” living with her for some or all of the interim period? HMRC guidance ( gov.uk/hmrc-internal-manuals/tax-credits-technical-manual/tctm02202 ) allows for temporary absences. There is no definion of temporary, and other guidance gives example of claimant in prison ( gov.uk/hmrc-internal-manuals/tax-credits-manual/tcm0114080 ) and the residence rule refers to temporary absence from UK as unlikely to exceed 52 weeks. Recovery is suspended while a MR/appeal going on.

If this is unsuccessful, then the exceptional circumstances route on TC846 is worth arguing, as it is an exercise of discretion - this could reduce the overpayment if for some or all of that period your client was unable to report changes due to her circumstances, e.g. due to stress of situation or mental health issues, and the advice given by social work, and the fact that she passed on the money, would be relevant. Adjudication Officer has said “When considering responsibilities under COP 26 it is vital HMRC take into account the customer’s circumstances and ability to comply. The Adjudicator emphasised HMRC need to be mindful of the direct impact their actions can have on customers, particularly vulnerable ones.” (webarchive.nationalarchives.gov.uk/20160601171056/http://www.adjudicatorsoffice.gov.uk/pdf/report2014.pdf page 20).
Mark