Serious help needed for 6k tax credits overpayment appeal :(

sillysally123

Hi,
I need some help with a tax credits "notice to pay" that I have just received recently.
It is really stressing me out and very difficult for me to understand where I went wrong and what I can do even after searching extensively on the internet and talking to HRMC for a couple of weeks now I am no further forward.

I am self employed and in sales so despite all my efforts could technically earn £0 - £1trillion per year. It was very difficult to estimate the income, especially since during the first year I had just newly become self employed, I had just had a baby and was working from home on the odd occasion the baby slept ect, through to year 2 where at the start I put him in childcare - by giving me 80% of my childcare costs it gave me an opportunity to focus more on the business and really make money for myself and not have to rely on them for money.

This worked I have to say and I am earning more and they have definitely made a wise investment in giving me the tax credits that I received at this time as I am now paying them back 10 fold in income tax.. Ok so I will not go on about the fine detail but here are the facts, I have rounded the figures.

08/09 earnings 12k but estimated was more (I was trying to go on the side of caution by estimating a high amount as I did not want an overpayment to happen).

09/10 - I had an underpayment in 08/09 and was paid that. I estimated more again (I think 14k, but cannot remember exactly).
Half way through the year I realised that my income was going to be much more than 14k so called them. I was told not to worry at all and that unless I earned 25k or more than the year before that this would be disregarded. Ok so I didnt think it would be so that was that.
A couple of months later I called again I think it was Dec 2009 expressing my concerns as my income was continuing to rise and didn't want to end up with an overpayment, at this point looking at what I was earning and the money that they were paying me I felt that they were paying me too much and felt slightly guilty. I was reassured again that unless it was 25k more than the previous year that it would be disregarded. ok fine.
Actual income for year turned out to be 33k for this year.
As I am self employed the actual income figure was given to me by my accountant on January 28th 2011, the deadline for paying self assessment is Jan 31st and I pay online so this is no problem.

From 28th Jan -1st Feb 2011 I called endlessly to tax credits to report actual income figures and could not for the life of me get through. I was on holiday on the 2nd Feb for a week and when I returned I reported the final figures to them on the 22nd Feb. The guy on the phone mentioned as far as I can remember that I was late and I explained why and he did mention somewhere that this years award would have already have been based on the previous year ect ect no idea was kinda like ok. Did not realise this would be significant.


10/11 - My actual income for this year was 52k, this is what I reported to them in Jan this year. I have not recieved any actual money from them for over a year as it was explained to me that my award goes to repay a previous overpayment.. I did not question this as was ok with not getting any money last year and I was aware that the lateness of my reporting my final figures the previous year. Assumed that maybe they had overpayed me by a month and that the 500 I was awarded last year should cover it...

Now

So now to my shock my "notice to pay" states that I must repay £6100 to be paid by next week..!! Nice one

So based on my 3 year income figures 12k - 32k - 52k

The gap has always been less than the 25k disregard.
However the second conversation on the phone to me revealed that the whole overpayment is probably down to the fact I reported the actual figure of 09/10 later than 31/1/11 and that the overpayment period was 09/10. I was advised to appeal, and was told a letter was being sent to me and that the appeal process was a lengthy one! Great just what you want hanging over you!!
But the advisor seemed to think this was a +ve as then it would delay any decision and repayment that I would have to make.

I would really greatly appreciate any advise on how to fill out the form, where the claim went wrong. The main points to stress in my appeal.

I have to say probably some people reading this post are asking themselves well if you earned 32k/52k ect then why not just pay the 6k back. I just have to answer - most of this money was paid in other taxes ie income tax paye (of other employees) and national insurance, some was used to expand the business and employ more staff ect. All in all I feel that the tax payer and the hmrc made a great investement "overpaying" me this money in 09/10 when I desperately needed it as a single parent to get back to work properly, I took the money with open arms and it worked out well for me, at no point did they tell me that it was a loan and I dont see why I should pay the 6100 back now. If I had not taken this route or it was not available, I would have been sitting in the house on income support. Apart from anything else I do not have a fleet of BMW's outside that I can trade in to raise the cash, I would need to take a bank loan out to do so.

Sorry for such a long post but my head is in turmoil with all this.

Anubis_2

There are plenty of knowledgable people on here who will be able to help you with Tax Credits. It is a minefield and I am sorry for your situation.

Mara69

The first thing that pops into my mind is surely you wrote to the Tax Credits department - either by e-mail,fax or snail mail??

sillysally123

Hi,
This has only come to light in the past 2 weeks, I wasn't aware of any overpayment previous to now, although I knew there was an overpayment that was being payed off by 2011/2012 tax credit award of 500 quid I, in my head had thought that would have covered the late reporting of 3 weeks at least from last year.
I had no need to write to them in paper until now.
I have always just called with changes and details income figures ect. I am being sent an appeals form in the post now, though it has not arrived yet, they are telling me nothing about what I have told them previously. I do not remember or have noted the exact dates that all the calls took place middle/ end of 2010 I know. They say that they can look back and listen to conversations ect. Thats fine, but I am unsure of the dates the calls took place exactly, the only detail that they revealed on the phone now was that it was the 22.02.11 that the call took place where the overpayment was identified and the fact that it was after 31.1.2011 that I would have an overpayment. I assumed that would mean that they over paid me by 21 days and not 1 year and 21 days? I dont know .
May I add that they cannot even tell me the actual income figures and estimates that I submited only confirm or deny what I say, they will not tell me dates of calls ect, all they are saying is that I should submit a claim this year then it will be added to the repayments from the previous years ect - em no no I will not be filling in a claim again. They even told me that I should fill in the form anyway as "I never know" what my income will be but it will be denied as last years income was too much...
So I have recieved 2x new claim forms through the post this week and ripped and in the recycling bin... I dont know exactly what they are trying to tell me, but I feel that they are trying to tell me something. I certainly am not going to make a new claim now or ever, even if I fall slightly into the category of the minimum award of 500 per year which I got (didnt get ) last year they can stick it.

ManicMum

I understand what you are saying but at the end of the day, if you owe the money to the state, you owe it. Whether or not you've given back lots in tax since then, there are many people who have worked and paid their tax too but they have just received the tax credits they are due. I normally write to tax credits - easier and simpler. Especially end of January when phones busy. Pop a letter in the post - job done. I have an overpayment this year. My fault - underestimated our income so they are taking it back each month from my payments.

sillysally123

But why would I have written an old fashioned letter>? Pop a letter in the post at the end of January last year? you would have been lucky to have found the top of the postbox! We had like 6 feet of snow!(Scotland) Anyway it was definately NOT any reaction to have written any kind of snail mail letter and sent it against all odds through that, why would I? I was assured that unless my income rose by more than 25k then there would be no difference on several occasions.

gardenia101

I hope you manage to get to the bottom of this - TC are a minefield when you are self employed.

My income fluctuated when I was s/e & I can remember being told not to worry about an increase provided it was not more than £25K (not much chance of that :rotfl:). But even though I always rang to tell them of my expected income (usually between £500-£1K increase) I also managed to somehow get an overpayment of just under £400.

I couldn't have done anything differently with regards to informing them of changes (unless I rang on a daily basis ) & although I can't see how they arrived at that particular figure, I just "paid it off" out of my next TC award. What suprised me was that TC couldn't provide any calculations to back up their overpayment claim - & as your overpayment is much larger than mine, I think there should be some onus on them to show "where it went wrong".

I did my own books too, so probably had a better idea of how my income was running (my books were really simple as I wasn't selling a product, or employing staff unlike you). Could your accountant not discover how this overpayment came about?

I have several other friends who are s/e & have all run up overpayments - don't know their details but they all do their own books & are super organised so I assume they have told TC about any changes promptly, but maybe TC systems can't cope well with the s/e?

alwaysskint96

sillysally123 wrote: »

Hi,




10/11 -

So based on my 3 year income figures 12k - 32k - 52k

I have to say probably some people reading this post are asking themselves well if you earned 32k/52k ect then why not just pay the 6k back. I just have to answer - most of this money was paid in other taxes ie income tax paye (of other employees) and national insurance, some was used to expand the business and employ more staff ect.
.

You are actually using the profit figures rather than turnover figures for tax credits arent you. Expenses such as employee wages etc shouldnt be classed as profit

shedboy94

sillysally123 wrote: »

Hi,
I need some help with a tax credits "notice to pay" that I have just received recently.
It is really stressing me out and very difficult for me to understand where I went wrong and what I can do even after searching extensively on the internet and talking to HRMC for a couple of weeks now I am no further forward.

I am self employed and in sales so despite all my efforts could technically earn £0 - £1trillion per year. It was very difficult to estimate the income, especially since during the first year I had just newly become self employed, I had just had a baby and was working from home on the odd occasion the baby slept ect, through to year 2 where at the start I put him in childcare - by giving me 80% of my childcare costs it gave me an opportunity to focus more on the business and really make money for myself and not have to rely on them for money.

This worked I have to say and I am earning more and they have definitely made a wise investment in giving me the tax credits that I received at this time as I am now paying them back 10 fold in income tax.. Ok so I will not go on about the fine detail but here are the facts, I have rounded the figures.

08/09 earnings 12k but estimated was more (I was trying to go on the side of caution by estimating a high amount as I did not want an overpayment to happen).

09/10 - I had an underpayment in 08/09 and was paid that. I estimated more again (I think 14k, but cannot remember exactly).
Half way through the year I realised that my income was going to be much more than 14k so called them. I was told not to worry at all and that unless I earned 25k or more than the year before that this would be disregarded. Ok so I didnt think it would be so that was that.
A couple of months later I called again I think it was Dec 2009 expressing my concerns as my income was continuing to rise and didn't want to end up with an overpayment, at this point looking at what I was earning and the money that they were paying me I felt that they were paying me too much and felt slightly guilty. I was reassured again that unless it was 25k more than the previous year that it would be disregarded. ok fine.
Actual income for year turned out to be 33k for this year.
As I am self employed the actual income figure was given to me by my accountant on January 28th 2011, the deadline for paying self assessment is Jan 31st and I pay online so this is no problem.

From 28th Jan -1st Feb 2011 I called endlessly to tax credits to report actual income figures and could not for the life of me get through. I was on holiday on the 2nd Feb for a week and when I returned I reported the final figures to them on the 22nd Feb. The guy on the phone mentioned as far as I can remember that I was late and I explained why and he did mention somewhere that this years award would have already have been based on the previous year ect ect no idea was kinda like ok. Did not realise this would be significant.


10/11 - My actual income for this year was 52k, this is what I reported to them in Jan this year. I have not recieved any actual money from them for over a year as it was explained to me that my award goes to repay a previous overpayment.. I did not question this as was ok with not getting any money last year and I was aware that the lateness of my reporting my final figures the previous year. Assumed that maybe they had overpayed me by a month and that the 500 I was awarded last year should cover it...

Now

So now to my shock my "notice to pay" states that I must repay £6100 to be paid by next week..!! Nice one

So based on my 3 year income figures 12k - 32k - 52k

The gap has always been less than the 25k disregard.
However the second conversation on the phone to me revealed that the whole overpayment is probably down to the fact I reported the actual figure of 09/10 later than 31/1/11 and that the overpayment period was 09/10. I was advised to appeal, and was told a letter was being sent to me and that the appeal process was a lengthy one! Great just what you want hanging over you!!
But the advisor seemed to think this was a +ve as then it would delay any decision and repayment that I would have to make.

I would really greatly appreciate any advise on how to fill out the form, where the claim went wrong. The main points to stress in my appeal.

I have to say probably some people reading this post are asking themselves well if you earned 32k/52k ect then why not just pay the 6k back. I just have to answer - most of this money was paid in other taxes ie income tax paye (of other employees) and national insurance, some was used to expand the business and employ more staff ect. All in all I feel that the tax payer and the hmrc made a great investement "overpaying" me this money in 09/10 when I desperately needed it as a single parent to get back to work properly, I took the money with open arms and it worked out well for me, at no point did they tell me that it was a loan and I dont see why I should pay the 6100 back now. If I had not taken this route or it was not available, I would have been sitting in the house on income support. Apart from anything else I do not have a fleet of BMW's outside that I can trade in to raise the cash, I would need to take a bank loan out to do so.

Sorry for such a long post but my head is in turmoil with all this.

The problem you have is that you waited so long to tell Tax Credits how much you earned in the previous year. Yes you do get a disregard on the income, however it is applied to the previous years income......but if you aren't declaring the income until the Jan/Feb then from April until Jan/Feb TC's don't know what you have earned. For example - in 09-10 you earned 32k, which meant your TC's from 06-04-10 would have been based upon £32k....however if you didn't declare this income until Jan/Feb 2011, the the only inc TC's would have held would have been the 12k from the year before, so your TC's for 10 months would have been paid on an inc of £12k instead of £32k which in turn would have caused the large o/p.
Essentially by choosing to wait until Jan/Feb to declare your income you have caused the o/p yourself - I know you say this is when the acountant gives you the figures, but ultimately the tax year ends on 5th April and your books can be done at anytime after this. Whether you are employed or s/e, you should still know whether you have earned more than double the year before so what you should have done is called TC's when the tax year ended, gave a more accurate estimate of what you had earned, then provided the actual figure when you had it.

HB58

I'm sorry that you are going through this. The tax credits system sounds terribly complicated and I don't see how the 'man in the street' can be expected to grasp the ins and outs!

I would suggest that you get some professional advice, your accountant might be able to help, otherwise try somewhere like CAB.

Too late now, I know, but I would advise anyone to follow-up any phone conversations relating to benefits with a good, old fashioned letter and ask anyone you speak to on the phone to do the same. That way you have hard evidence of anything you told them or they told you...

Mara69

HB58 wrote: »

The tax credits system sounds terribly complicated and I don't see how the 'man in the street' can be expected to grasp the ins and outs!

To be honest, all the 'man in the street' has to do is make sure s/he keeps the tax credit department fully appraised of their income - in writing. Making calls, not noting the date, time or name of the person you are talking to is foolish. A letter, either posted, faxed or e-mailed will make all the difference when appealing an over or underpayment. It is evidence. A phone call is not.

It is going to be hard to say 'I spoke to someone at some point and told them - honest'.

To be honest, I am really surprised that you own an apparently successful business but still don't see the sense in putting pen to paper. Especially when dealing with the likes of the tax credits department (or any offical Government body).

Good luck with the appeal - you're going to need it, given the lack of evidence you have - they can't even trace the calls as you can't remember the dates you made them!