help with complex income tax query from incap benefit claimant please

bundance

This is a lengthy post and i apologise in advance for it, but I would dearly love some help with it please. The incpacity benefit queries in the post are resolved, but there is still some income tax confusion.

This post ivolves incapacity benefit, and income tax, and I would be grateful for some advice and reassurance please.

I have been claiming incpapacity benefit since 2004 due to being medically retired from my employment due to mental illness. I receive a small pension from them and have done since 2006 when I was officially retired on medical grounds.

In error, I failed to notify the DWP that I was receiving a pension, but have recently notified them and filled out form IB6.
They advise me that there would be an overpayment for me to pay back and would deduct the amounts from my fortnightly benefit, which I am happy with.
They sent me form IB30CC with the revised figures on.

The IB30cc also reminded me to keep the HM Revenue and Customs upto date, so I informed them of these changes.

They then changed my tax code, and said there was money due back to me.
I received my pension pay slip, and there was no tax deducted.

Yesterday, I was advised by a letter from the DWP, that, due to my retrospectively notifying them of a pension I had been getting since 2006, they have adjusted my fortnightly incpacity benefit to reflect my current pension only, and not the pension I had been paid since 2006.
They advised me, that the information regarding the pension going back to 2006 (overpayment from DWP) had been passed onto their Debt management section, and that the Debt management section of the DWP would be notifying me, in due course, of further deductions to be made from my benefits, to pay all of the outstanding amount, in respect of the retrospective notification of pension from 2006-2009, once a debt figure has been established. This is fine by me, as I owe the money.

My query is about income tax.

On the 7th August I notified HMRC, over the phone, of the details on the IB30CC the DWP had sent me, in response to the IB6 form I submitted to them, notifying them of pension I had been receiving since 2006.
I assumed that they needed to know as soon as possible, and also assumed that the figures on the IB30CC reflected money owed back to DWP from 2006-2009.

In response to my telephone call to the HM Revenue and Customs, I received the following letter: (see royal blue italic text below)

Dear Ms **********

Thank you for your telephone call today to keep us up to date with the amount of incapacity benefit you are receiving. I have updated the record for the current tax year.
While checking over the past three years I noticed that your work pension had been taxed at the basic rate. Some of your personal allowance was unused and so we owe you money for the last two tax years as I explained during the call.
To avoid the same thing happening again in the current tax year, I hae amended the tax coding on the pension so only the correct amount of tax will be taken. When your pension provider uses the new code they will back date it to april so you may receive a small refund in your pension payment.
As well as issuing the tax code to the pension provider, I have sent a copy of the code to you under separate cover for your information only. You do not need to do anything. Ourselves and the pension provider will do all that is needed.
I have also sent to the back office here to raise a calculation of your income and tax apid for the 06/07 and 07/08 tax years. Once this is completed they will send you the calculation and a cheque will follow. Until the calculation is completed, I cannot tell you the amount.
The letter hopefully puts your mind to rest regarding your tax affairs and am sending it as you requested to fully explain all we have done on your behalf. I hope this is satisfactory."

In response to the letter from the tax office, I typed the following letter on 14th aug, (see brown italic text below)

Dear Sirs

Further to your very helpful letter from Ms ***** I have obtained revised figures from the DWP regarding my incapacity benefit payents to take into account my recent notification of pension from my ex employer which I sent the DWP recently from feb 2006-presennt.
As the letter states I have been taxed at the basic rate. Some of my personal allowance was unused and I have been informed I may be owed money by yourselves.
The annual statements I was receiving from the DWP were therefore incorrect and I have been unable to obtain annual figures from them. They have provided me with details of what I should have been paid from feb 2006. (see enclosed letter from DWP) and also form IB30CC which gives a breakdown.
Please write to me if you requre more information.

I now realise I may have been premature in informing the HMRC and complicated matters for my self.
Maybe I should have waited till I receivied the final overall figures from DWP, and their Debt management section, which will incorporate overpayments dated back to 2006, as mentioned above, which I will receive from DWP in due course?

As I mentioned earlier in this thread, my latest pension payslip shows a hefty rebate from the tax office.
I advised, on this thread, that I would write a letter to HM Revenue and Customs, (see navy blue italic text below-sent 24th aug) as I was unsure of whether the rebate on my latest pension payslip related to the incapacity benefit figures I had given over the phone, or whether it related to another tax error between the HMRC and my pension provider.

I wanted to establish exactly what the rebate relates to.
Until I know this, I do not feel like spending the money, as I am not sure its mine.

"Dear Sirs 24-8-09

Possible need for repayent to yourselves in respect of income tax and Incapacity Benefit/Pension

*On 7th August 2009 I contacted HM Revenue and Customs to update you about an oversight on my part, in failing to notify, at the time, the DWP Incpacity Benefit people, of a pension I had been receiving since Feb 2006.
I spoke to a very helpful staff member at HMRC, (Ms *****) giving her, over the phone, details of the oversight from a form IB30CC (copy enclosed) whch the DWP had sent me.
On the strength of this, she changed my tax code and wrote to me on the 7th of August (copy letter enclosed)

* On my latest payslip from my pension provider (see copy enclosed) no tax has been deducted.

*The reason I think there has been a mistake is due to the last paragraph in a letter from the DWP dated 17th August. This last paragraph reads
[When any overpayment is fully recovered, the Tax office make any adjustment to your tax records. We are not involved in any of the adjustment.]

I have not heard back from the tax office, in response to both letters sent to them. I have confused myself, the DWP and the tax office.
To save me a long wait in the CAB office, (suffer agorohobia and panic, and cannot get hold of them on the phone) and laboriously explaining this process to them, I thought I would come here for advice please?

What do I do next?
Do I contact the tax office, as I do not want to be holding onto money that is not mine, and risk getting into trouble for it?
Do I do nothing until I hear from the DWP with regards to the final amount of money I owe?

I just want to keep all authorities up to date.

Once again, very sorry for lengthy post, and would be eternally grateful for advice on what to do next, if anything.

thank you kindly

fengirl_2

HMRC are not up to date enough nor responsive enough to deal with your shower of letters. I would wait until you get the final statement from the DWP and meanwhile if you receive a payable order from HMRC, do not cash it, but hang on to it until you are sure its about right. If the repayment is too much, you can return the payable order with the correct details for them to do a re-calculation.

bundance

I did not get a payable order, but I will be getting the money in my bank.
This is because my pension pay slip showed no tax deducted.

I have already received the extra money - its already in my bank.
Other than not spending it/keeping it aside, what shall I do, if they wont reply to my letters?

I've given them wrong info and want to put it right.

I dont want to get into trouble


thanks

fengirl_2

As I said in my previous post, you are bombarding HMRC with too many letters which they are not set up to deal with. Keep the repayment safe in your bank and then cntact them once you have a final figure from the DWP.