Revenue want to reclaim their refund...

bm212

In december 2008, the revenue sent me a letter saying they had credited me with nearly £2000 due to some overpaid tax. This seemed a bit strange to me as I wasn't aware of anything like this, but the income tax form has always been a bit of a mystery to me. I phoned them up and asked them several times whether they had made a mistake and whether I would have to pay the money back. They assured me that I wouldn't.

So, fast forward to this morning. I got a bill in the mail, from the inland revenue saying that I owed them a couple of hundred pounds. I figured they had carried out some tax calculations and found a shortfall, so phoned them up to clarify. They then said that I had to pay back the £2000 that I was credited at the end of last year - in addition to the two hundred pounds from this morning's bill.

This seems grossly unfair to me - I said so, and they said that they would check to confirm. They haven't got back to me yet about this.

My question is: has anyone else had the inland revenue try to reclaim refunds that they have previously paid out? What are my rights here? I'd obviously rather not shell out £2000 right now, especially in this economic climate.

any comments/advice welcome

Mikeyorks

bm212 wrote: »

What are my rights here?

Depends. Was the £2000 refund as a result of a Self Assessment return you had submitted?

bm212

I suppose it must have been, I don't have any other contact with the inland revenue apart from via self assessment tax returns.

System

What you need to know is did you make a mistake on your tax return or did they make a mistake when they input the details on the system. That's assuming you filed on paper rather than online.
However either way if they paid you money you weren't entitled to then they will expect it back though I suppose you could claim that you've spent it after previously being assured you were entitled to it and ask to pay them back over a longer period of time.

Also you have to remember it's taxpayers money:o

bm212

I filed online, so there's no scope for a data entry mistake by them (assuming that their IT systems aren't completely rubbish of course). My argument isn't so much one of fault in the actual figures - I can't claim to be infallible. It's more that if they assured me that the money was mine, it seems unfair to immediately demand I pay it back.

Demanding immediate repayment is particularly unfair when you consider the following two points:
i) the revenue is perfectly able to adjust tax codes to claim more tax back next year.
ii) they don't pay taxpayers interest when they charge us additional tax and then pay us back at a later date, thus suggesting they aren't particularly bothered about the time value of money

Anyway, they haven't demanded immediate repayment yet, so I'll cross my fingers and hope for the moment.

System

The problem is that when you rung up the person on the phone would just have checked your SA statement and seen that it was sitting in credit and assured you that the money was yours. There was nothing else they could do other than go through your return entry by entry and ask you if it was right and with call time targets that wouldn't happen. Besides which it's called self-assessment and they assume you did it right. Obviously the error on your return was discovered by a processor later after the automatic issue of the refund.

Whilst it's true that money can be recovered via the tax code in a later year HMRC rarely allow recovery for sums greater than £2000.

BTW HMRC do pay interest though at a pretty low rate. Also those taxpayers who self assess have the luxury of paying their tax up to 10 months after the tax year has ended or via their tax code the following year without being charged interest whilst the rest of us solely on PAYE have to pay each week or each month.

amf

sniff, sniff.........does anyone else smell sh1te?

Mikeyorks

amf wrote: »

sniff, sniff.........does anyone else smell sh1te?

No - why would you? People who inadvertently put eg their net income figure (if PAYE), instead of gross, will often be advised of a refund under SA. Which they are then required to repay once processing is fully complete - sometimes months later.

bm212 wrote:

My question is: has anyone else had the inland revenue try to reclaim refunds that they have previously paid out? What are my rights here?

Many. It's made quite clear that SA returns are processed initially on your figures - and then checked later. Legendary cases, in particular when most filed on paper, of people taking exotic holidays on the strength of 'unexpected' refunds .... and then having to repay.

No 'rights' unfortunately ...... but do look at the full computation you should have - and check where the error(s) lie ...... and that it is your error? You could try to get it 'coded out' (you imply you are PAYE). There was a fault in the online system whereby the option to code out should have been withdrawn 31st Dec 08 .... but wasn't. They will honour, if requested, those who understood coding out was a potential up to 31st Jan close date. Doesn't quite fit your case - but might be worth asking?

amf

Mikeyorks wrote: »

No - why would you?

A number of reasons, including;-

1. A newbie claiming to be the archetypal village idiot when the layout, grammar, nuance and language of his posts suggesting that the poster is rather smarter than he would have us believe.
2. The OP acknowledges it can only be his mistake. He cites a call (several calls?) where he made repeated requests that the correctness of the overpayment be confirmed. I don't think many HMRC personnel will have received such a call.....are you sure that this overpayment is correct? Are you really sure? Are you really, really sure? etc....
3. He seems to know a lot more than he's letting on ....The possibility of adjusting tax codes to recoup underpayments.
4. The amount involved........I'd be pretty sure that HMRC wouldn't charge a tax geared penalty on this sum......a little higher might make a difference.

IMHO this is someone hoping to score from the frailties of the SA system and looking at a best case scenario....if his scam didn't work, he'd get a short term loan at a cheap rate of interst.

Bottom line, it matters not because HMRC will chase him for the dosh as is appropriate.

chriiiiiiiis

If the amount they are now asking for is completely correct, then you have been over-repaid. And:

You have no rights
You have to pay your tax bill
It will not be written off
The balance is increasing daily until you make payment.

bm212

Thanks for the information everyone. I suppose I'll just have to wait until they call me to find out what's going on, and whether or not I'll get a grace period to repay the money. I'm hoping at least they won't charge me for late payment (they posted the demand on 28th Jan, 2nd class, and it only reached me today).

@amf:
I'm not trying to exploit the system or deceive anyone. The situation is exactly as I have laid it out in my original post. However, given the rather hostile nature of your posting I feel I should probably reply in a bit more detail.

"1. A newbie claiming to be the archetypal village idiot when the layout, grammar, nuance and language of his posts suggesting that the poster is rather smarter than he would have us believe."

I have not claimed to be smart, or a village idiot, merely to not know much about the intricacies of tax returns, hence posting on this forum for some advice.

"2. The OP acknowledges it can only be his mistake. He cites a call (several calls?) where he made repeated requests that the correctness of the overpayment be confirmed. I don't think many HMRC personnel will have received such a call.....are you sure that this overpayment is correct? Are you really sure? Are you really, really sure? etc...."

It's quite likely to be my mistake, I agree, as I post self-assessment online. However, I contribute via PAYE so my employer sends data to HMRC and presumably there is scope for this being incorrect, and an error being made (in this case in my favour). I made a call to HMRC querying it; whether you believe I did or otherwise is somewhat beside the point.

"3. He seems to know a lot more than he's letting on ....The possibility of adjusting tax codes to recoup underpayments."

I get a coding notice every year in the post. I presume everyone else does too. This very clearly shows you how the tax code relates to your tax-exempt amount and how it has been adjusted for underpayments/overpayments made in previous years.

"4. The amount involved........I'd be pretty sure that HMRC wouldn't charge a tax geared penalty on this sum......a little higher might make a difference."

No idea, I don't know enough about HMRC's processes to answer this, which is why I posted on the forum to see what might happen in the next couple of days.

"IMHO this is someone hoping to score from the frailties of the SA system and looking at a best case scenario....if his scam didn't work, he'd get a short term loan at a cheap rate of interst."

Well, that's your opinion. I'm not trying to exploit the system or scope out some sort of scam. However, it seems that you're suspicious enough to not take anything I say at face value so there's probably no value in me labouring the point.

"Bottom line, it matters not because HMRC will chase him for the dosh as is appropriate."

You're right, it matters not. I don't want to start a flame war so will leave it at this. Apologies if I've unwittingly breached forum etiquette in some way.