tax credit overpayment and OR

bump! not sure sorry, hopefully someone else knows.

Hope this is of some help, and hope its ok to post on here.

http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch73-84/Chapter77/part7/Part7.htm


77.50 Recovery of overpaid credits after a bankruptcy order is made

In certain circumstances a tax credit may be overpaid and thereafter a recovery may be sought by HMRC. That recovery may be achieved by deductions made from ongoing awards of tax credits or by direct collection where there is no ongoing award of tax credits or where the ongoing award has ceased.

Where tax credits have been overpaid and a bankruptcy order is subsequently made against the claimant, whether or not the overpayment is a provable debt in the bankruptcy depends on the circumstances of the case as follows:

Final award notice (of repayment) issued before the date of the bankruptcy order.

If the recovery is made, or would have been made, by direct collection (in cases where there is no ongoing award of tax credits), HMRC will submit a proof of debt in the bankruptcy, considering the debt to be a provable one.

If the recovery is made, or would propose to have been made, by deductions from ongoing awards of tax credits, HMRC will not submit a proof of debt in the bankruptcy but will continue to make the collections from the ongoing award of tax credits until the bankrupt’s discharge from bankruptcy. Thereafter the balance of the debt will be written off. This action, of continuing to recover the debt post bankruptcy, follows the decision in the case of R v Secretary of State for Social Security, Ex Parte Taylor and Chapman [note 1] which provided that where a bankrupt was indebted to the Secretary of State for Social Security in respect of debts arising from earlier receipts of social security benefits, he/she was entitled to deduct sums from future benefits to be received thereafter in reduction of that indebtedness. Should any bankrupt object to the taking of the ongoing recovery action by HMRC in this way, they should be referred to that Department without further comment by the official receiver.

In all cases where a final award notice (of repayment) has been issued by HMRC before the date of the bankruptcy order, the debt should be added to the list of creditors and HMRC treated by the official receiver as a creditor in the usual way.


Final award notice (of repayment) issued after the date of the bankruptcy order.

Where a final award notice (of repayment) is issued by HMRC after the date of a bankruptcy order, whether the recovery action be considered by direct collection or from the ongoing award of tax credits, the bankrupt will be pursued by HMRC in the usual way even though the over-paid tax credits arose before the date of the bankruptcy order. This follows the decision in R (on the application of David William Steele) v Secretary of State for Work and Pensions [note 2]. In these circumstances the debt will not be included in the list of creditors. See also Chapter 40 Part 6 - Creditors and liabilities.

Should the official receiver require information on how HMRC intends to treat tax credit overpayments in individual voluntary arrangements, the official receiver should contact Technical Section directly for this information.

tax credit debt is complicated when it comes to br, alot is down to the timing of the debt coming to light and arrangements being made to repay. Unfortuantly, it looks as if they were right, but bear in mind that if you have a balance left at the time of discharge, make sure you get a copy of your certificate off pronto as it will wipe any balance off. (if I have read the above correctly)

no problem, one other thing, if the repayments are causing you hardship then you could give them a ring and they can sometimes sort out lower repayments. Not sure of the process, but may be worth bearing in mind. In the meantime though it sounds like you are on the right track now. Best wishes for your debt (& phone call ) free future and congratulations on keeping the car. xxx