Tax Credits Overpayment...how to fight it??

[Deleted User]

leveller2911 wrote: »

The whole "tax credits" system is a nightmare.We have also had "overpayments" the largest one which they told us about dates back to 2004-5.We have had to get copies of our bank statements for the last 8 years so we could check the amounts we actually received.

Our problem is I am self employed and tax credits are based on your previous years earnings.The overpayment arose when I had a "good year".My books this year went in to the accountant in April, then to the tax office at the beginning of June and my accounts were finalised by the TO 1st week in October.This is crazy,it shouldn't take that long.The TCO say we can "Estmaite" the figues but If thats wrong and we don't get the figures back from the HMRC we are possibly then overpaid again.

The system is not fir for purpose, what was wrong with "married mans allowance"? it was run by HMRC and done through the tax codes.

We were so !!!!ed off we haven't filled the forms out for the last 3 years(yes I know we should have,but through frustration we didn't). Not received a penny in those years but that hasn't stopped them telling us we have been overpaid in 08-09 by £200-00, even though they haven't paid us a single penny.......

Oh and talk about being pushed from pillar to post on the phone.............. rant over..........good luck OP :rolleyes:

You may have had a good year but you need to let them know how much your income is going to increase by. If it increase by more that £2,500 you wil have been overpaid. They have now changed this to £25,000 to try to avoid overpayments.

They may not have been paying you directly in 08/09 but you ay have been awarded a small amount of CTC which has been going towards your overoayent instead of being paid directly to you. If you have not been filling out the paperwork they have likely terminated your claim now. When it is terminated they do it from the start of the tax year so anything you would have been awarded (paid towards the overpayment) will now be classed as an overpayment.

You MUST read your paperwork fully - I cannot understand why people who have had issues before do not read the letters that come through the door and then act surprised when something else happens.

leveller2911

subsoniccoyote wrote: »

You may have had a good year but you need to let them know how much your income is going to increase by. If it increase by more that £2,500 you wil have been overpaid. They have now changed this to £25,000 to try to avoid overpayments.

They may not have been paying you directly in 08/09 but you ay have been awarded a small amount of CTC which has been going towards your overoayent instead of being paid directly to you. If you have not been filling out the paperwork they have likely terminated your claim now. When it is terminated they do it from the start of the tax year so anything you would have been awarded (paid towards the overpayment) will now be classed as an overpayment.

You MUST read your paperwork fully - I cannot understand why people who have had issues before do not read the letters that come through the door and then act surprised when something else happens.

Thanks for your post Subsonic.We have now started a claim for the full year as you say, my problem is with the system.Its not a good system especially for the self-employed ,I know lots of self -employed people ALL bar none are having touble with the TCO.We never had these problems with the old system.
Now given the fact that credits are awarded based on previous years accounts when an over-payment is made and then clawed back, its quite possible that you rely on the money during the year they claw it back and don't need it the year its awarded,the whole system is flawed.

Given that all 3 of the last years our income was a fair bit lower than the year we were overpaid can we start a claim for the other 2 years that we didn't claim for at all?.........

This year we have told them exact figures as soon as HMRC accepted my accounts.Its still wrong to tell people to "estimate" and as for HMRC taking over 3 months to accept my accounts is nothing more than a joke.
Iv'e been self employed for 25 years and never had this trouble before..Lastly Subsonic, I have more than enough work to do running my business without having to deal with the TCO who send conflicting letters,amounts and are nearly ALWAYS engaged when you phone up,whether its 9:30 am (go to work late to phone them) or 4pm (come home early to phone) or even at 7pm...........Then when you do get through your told you need to phone another department etc etc etc ..

Whilst I accept we should have filled the forms out for the last 3 years its been like banging your head against a wall.Why is it for years they said"we will NOT ask you to pay this money back as it will be taken from future awards" but NOW they want it paid back via Direct Debit???? Funny that..

Thanks for your advice though Subsonic.....

Sorry to the OP for ranting on their thread..:D

Knelley

I agree with the above poster. I have just had a discussion with the Tax Credits peeps in regards to previous years payments. I worked part time a couple of years ago and then went to full time work. My full time wage put me over the threshold for the WTC yet I still managed to receive it due to the previous years income. The following year I received nothing but my wage was the exact same. Basically the year my money goes UP, is the year that I receive money, only to have them take it off me the following year when I give them my last years income! The system is seriously flawed.

[Deleted User]

Tax Credits are based on the previous year income but you can earn up to £25k more without it causing an overpayment.

The problems arise when you estimate your current year and have actually under-estimated. If you under-estimate, you will be overpaid on the difference between the previous year income and the estimate you gave.
Also, if you dont give them a new estimate for the year they will automatically use the same one when they go in to the next tax year. So they wont know what figure they should have used between 6th April & the date you complete your renewal - which can be as late as 31st July. So for 4 months you could be etting overpaid as you have not updated your estimate.

Have a look here for an explanation of the £25k disregard. http://forums.moneysavingexpert.com/showthread.html?t=1954065

The system may not be totally ideal but it's what we have to work with right now. If we can 'educate' the claimants it will go a long way to helping them to avoid overpayments and make sure they receive their full entitlement.

leveller2911

subsoniccoyote wrote: »

Tax Credits are based on the previous year income but you can earn up to £25k more without it causing an overpayment.

The problems arise when you estimate your current year and have actually under-estimated. If you under-estimate, you will be overpaid on the difference between the previous year income and the estimate you gave.
Also, if you dont give them a new estimate for the year they will automatically use the same one when they go in to the next tax year. So they wont know what figure they should have used between 6th April & the date you complete your renewal - which can be as late as 31st July. So for 4 months you could be etting overpaid as you have not updated your estimate.

Have a look here for an explanation of the £25k disregard. http://forums.moneysavingexpert.com/showthread.html?t=1954065

The system may not be totally ideal but it's what we have to work with right now. If we can 'educate' the claimants it will go a long way to helping them to avoid overpayments and make sure they receive their full entitlement.

Its obvious your very inteligent and know the system Subsonic but many of us already spend all of our time working, why should we be "educated", its the governments and Benefits agencys jobs to do the work not ours, thats what we elect/pay them to do...If TCO talked to the HMRC they would know what we all earn and we wouldn't need to be the middleman/woman, being pushed from one to the other...Crazy system.

"The system may not be totally ideal but....." Whoever thought of the system needs shooting.As for expecting people to "Estimate income" is rediculous, what other system of tax expects the tax payer to Estimate", self assesment tax system is flawed but at least you don't have to estimate.

We need to have a straight forward system which is based on peoples tax code. One of the major benefits would be it doesn't need so many people to run it.HMRC do with tax returns ,its just like the Meercat says "Simples"........

PS I'm not having a go at you Sub, just the system...

[Deleted User]

Every claimant needs to take some sort of responsibility for their own claims. The system can be quite complex which is why TCO need to try educating them. Not for the benefit of TCO, but for the banefit of the claimant. It means they get paid the amount they should - no overpayments or underpayments. In an ideal world there wouldnt be overpayments but unfortunately we dont have an ideal world

TCO cannot just use information from other parts of HMRC as it may be inaccurate as tax credits takes in to account only certain types of income and allows you to disregard some parts of your taxable income - eg. the first £100 p/wk of maternity pay & the first £30k of redundancy. It would also be difficult to 'see' other income from bank accounts and foreign income. The deadline is 31st July but the SA deadline is after this so what would happen then?

It is not as simple as amending tax codes as there would still be those who dont work but would still be entitled to tax credits. And then the claimant would need to wait until the employer had submitted a P45 if he/she had left work.

As for estimating - if you are going to earn more you need to tell TCO, how else would they know how much to pay you? You dont need to calculate an estimate as long as your income is not going to increase by more than £25k, you can just give your actual figure at the end of March each year. They will then use this as an "estimate" to calculate your award until the pint you have completed the renewal. If your income is actually going to be lower you do need to give an estimate if you want the tax credits to increase. Although you could just leave the system to award your tax credits on the normal income already on there, then declare your actual income at the end of the year and receive any underpayment at that point.

There should be a simpler system but it is not going to happen any time soon. The government are trying to get rid of more civil servants which means larger workloads and less resources to try to improve the system we have. A new system would cause an extortionate amount of money (where are the tories going to get the money from?).

System

leveller2911 wrote: »

My books this year went in to the accountant in April, then to the tax office at the beginning of June and my accounts were finalised by the TO 1st week in October.This is crazy,it shouldn't take that long.The TCO say we can "Estmaite" the figues but If thats wrong and we don't get the figures back from the HMRC we are possibly then overpaid again.

I understand your frustration with Tax credit procedures and the whole thing about estimates and actual income figures but if you employ an accountant and he/she sent your tax return in in June then you didn't have to wait for the tax office to finalise anything. Your accountant should have been able to give you your actual profit figure themselves that's what you pay them for. The only thing HMRC had to do was send a copy of the calculation back to you when they had processed the return.

tax_credit_frustrations

subsoniccoyote wrote: »

Could you explain what you mean by "despite this post".

OP, have you asked how you were overpaid? What reason were you given? You need to make sure to dispute using detailed evidence if required. If you were given incorrect information on the phone you would be best to sumit a Subject Access Request to get a copy of the calls you made. That way you can pin-point what information you were given that was incorrect.

Thanks for the advice, currently on the phone to request in writing the reason for the overpayments and also making the subject access request..think this should help as was clearly advised incorrectly on the amount of overpayment to expect

Em