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Tax Credits Overpayments - Help!!!
savvysass
Posts: 112 Forumite
Hi
My b/f is self employed. His income to the inland revenue has been declared for 05/06 as approx £8000, however at the start of this year he secured a large building contract worth approx £12000 that has been completed and paid for before the end of the tax year. He is now frantic with worry because he did not inform the inland revenue (unfortunately was not top of his list of priorites) and will have received a substantial overpayment for the year.
He knows he will have to pay it back but is worried that he will be taken to court or will want it back in a lump sum. Also he is now at a loss as to what to declare as his estimated income for the forthcoming year.
He lives alone with his two children and as you can imagine is panicking that he will be left with nothing to feed his two sons on.
Any advice would be really appreciated
My b/f is self employed. His income to the inland revenue has been declared for 05/06 as approx £8000, however at the start of this year he secured a large building contract worth approx £12000 that has been completed and paid for before the end of the tax year. He is now frantic with worry because he did not inform the inland revenue (unfortunately was not top of his list of priorites) and will have received a substantial overpayment for the year.
He knows he will have to pay it back but is worried that he will be taken to court or will want it back in a lump sum. Also he is now at a loss as to what to declare as his estimated income for the forthcoming year.
He lives alone with his two children and as you can imagine is panicking that he will be left with nothing to feed his two sons on.
Any advice would be really appreciated
0
Comments
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His overpayment may not be as big as you think, its the net profit that they want to know about, does the £12K represent profit or just the fee charged for the work ? , whats his expected profit ?, as thats what'll matter.I no longer work in Council Tax Recovery but instead work as a specialist Council Tax paralegal assisting landlords and Council Tax payers with council tax disputes and valuation tribunals. My views are my own reading of the law and you should always check with the local authority in question.0
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Hi,
He is probably best contacting the Inland Revenue and explaining what has happened! Or better still if he sees someone at the local Citizens Advice Bureau they may be able to inform him what to do!
The following links to webpages may help:
http://www.adviceguide.org.uk/b_overpayment_of_tax_credits.pdf
http://www.hmrc.gov.uk/manuals/ntcmanual/payment_opayments/ntc0780310.htm
The second of these pages says that if you inform them of a correction needed they will recalculate - at least thats how I interpret it!Weight Loss - 102lb0 -
If it is an overpayment, hes looking at one of around 37% of any excess income over that of which his award was calculated on.
If he earned £20K and his award was based on £8K, then hes overpaid by around (12K*0.37)=£4400.I no longer work in Council Tax Recovery but instead work as a specialist Council Tax paralegal assisting landlords and Council Tax payers with council tax disputes and valuation tribunals. My views are my own reading of the law and you should always check with the local authority in question.0 -
Thanks CIS, he will be looking at profit of around £20k, how will they recover the overpayment, will they want it in a lump sum?0
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Usually they take payments as a %, of the next yrs award, but its probably best to ring HMRC and ask them how overpayments are recovered.I no longer work in Council Tax Recovery but instead work as a specialist Council Tax paralegal assisting landlords and Council Tax payers with council tax disputes and valuation tribunals. My views are my own reading of the law and you should always check with the local authority in question.0
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The recovery %'s are;
10% of your 06/07 award if you're receiving maximum entitlement.
100% of your award if you're receiving min entitlement ($547.50)
25% of your award if you're receiving anything else.0
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