Tax refund and now they want it back!!

ramsgirl

Hi - a bit of advice please!

My stepdaughter has not worked for a couple of years due to having a little one, she has recently applied to see if she was due a tax refund. On Saturday morning she received a cheque in the post for almost £1,000 (fantastic you may think...), then this morning (Monday) she received a further letter from them stating that an error has been made and they require her to either send the cheque back or send them a cheque for that amount ...

When she rang them they said there had been an error in this process and it would require further investigation and it would take roughly 4 weeks to resolve and in the meantime she must return the money.

Overall, the original letter states she is owed a refurd for just over £2000 therefore even taking this into account she is still entitled to a good refund. Problem is she banked the cheque on Sat and has booked a holiday to be paid with the money once cleared, so technically she will not have the money once the cheque has cleared as it is already committed against the holiday.

Does anyone have any advice on how to deal with this?

Thanks in advance...

Judith_W

I would suggest she calls them and gets them to explain exactly how much she is owed (if anything) if they can. She can then look at the holiday cancellation T&Cs to see if she can get out of the holiday with minimal costs if she can no longer afford it. HMRC may be required to offer some sort of compensation but it is not going to be much.

Don't forget if there has been an error then the original £2k quoted is prob wrong too

chrismac1

Your first action in my view is to consider what the correct amount of tax was. There is every chance in my experience that NEITHER the original refund or the latest assessment was correct. If this refund was purely PAYE related, it's worth posting up the Gross Taxable Pay and Tax Paid from P45s and P60s by tax year and let's see if we can get the numbers to add up. If there is anything going on other than PAYE it may be more tricky.

When it comes to any repayment that is several weeks off. First of all have they raised an Assessment - as opposed to a mere calculation. I ask this because these calculations they send out have no standing, I advise my clients to ignore them and so far none have been followed up including one client whose calculation showed him - wrongly ! - owing over £3k. No matter, we don't need to haggle over it as there is no Assessment.

If there is an Assessment you have 31 days to Appeal it, the feedback on here might help you to do this effectively. Then even if you end up losing this - some months off - lack of funds has been held in recent Tribunal cases to be just and reasonable cause to delay paying tax bills, or to pay them off slowly. So personally I would not be rushing to cancel the holiday, there is a long, long way to go before you have to hund over a penny if you play your hand well.

System

..... Although, she should have been aware that cheques take at least 3 banking days to clear, so counting chickens before they are hatched comes to mind.
Just because a cheque is from HMRC does not mean it is any more valid or reliable than any personal cheque from anyone else.

As chrismac1 says, calculate her own tax to see how much to expect to be refunded, then decide if she needs to cancel the holiday.

After doing the calcs, as quickly as possible, if she cannot afford the holiday, then the sooner she cancels, the lower the charges should be.

Sambucus_Nigra

ramsgirl wrote: »

Does anyone have any advice on how to deal with this?

a - cancel the holiday
b - work out the figures for yourselves to check what tax she did pay that year.