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HMRC tax credit overpayment demand
thelaststraw
Posts: 13 Forumite
Hi,
Iam new here through sheer desperation in an attempt to resolve an ongoing issue with HMRC over tax credits.
For several years we have been arguing with them regarding overpayments, but they still insist that monies have to be paid back to them. We have always contacted HMRC when changes in our circumstances occur, but still find ourselves in a position where we now owe over 5K.
My family is at breaking poit with this as we do not know where to turn as HMRC are now demanding full payment within 30 days becuase our entitlement to tax credits was reduced to £0 six months ago. We have tried to address the problem with HMRC, but our reasons have been rejected.
To make matters worse, HMRC have sent us another letter this week saying they may have made a mistake and that we could now be entitled to tax credits as there was a reduction in income last year. we are so frightenend about claiming any money that we are not going to rspond to this.
Below is some of the resonse letter from HMRC. If there is any help that someone can offer, we would be very grateful
Thank you for completing the form TC846 asking us to look at tax credit overpayments for tax years: 2003-2004, 2004-2005, 2005-2006, 2010-2011 and to consider whether you should have to pay it back.
2003-2004
Your initial entitlement to tax credits was £2,717.36 working tax credit and £3,436.74 child tax credit based on your joint annual income of £7,578.00. this was shown on your award notice issued to you on 02 May 2003
I have found that the overpayment arose on 14 may 2004 when we were told that your annual income had changed.
When we updated our records with this information, yours and your partner's income was not included. This meant that your award was recalculated using an income figure of £0.00. This increased your entitlement to £3.026.82 WTC and £3,436.74 CTC and, as a result of this your payments increased. We are sorry about this mistake.
We sent you an award notice dated 17 May 2004 which stated the annual income we had used to calculate the amount of tax credits you were receiving. We asked you to check the personal information on your award notice and tell us if anything was wrong, missing or incomplete.
On August 16 2004 you told us about this mistake and we amended our records to include your income of £18.200.00 and your partner's income of £6.000.00. Because of this, your entitlement reduced to £0.00 WTC and £545.34 CTC.
This means you were overpaid by £5,918.22, which is the difference between the amount we paid you and the amount you were entitled to receive.
We have recovered £2,891.40 from other awards, leaving an outstanding overpayment of £3,026.82
2005 -2006
I have found that the overpayment arose because off an increase in your joint income
Your award for tax credits was WTC £0.00 and CTC £3,787,65 this was based on your joint annual income of £15.273.00
On 06 August 2005 we were told your correct annual income was £24,000.00 this reduced your entitlement from £3,787.65 to £862.41 which was shown on the award notice issued to you on 08 August 2005. The award notice and the accompanying TC602 (SN) guidance notes advised you about reporting changes in your family circumstances, including your income.
On 15 May 2006 you told us that your correct joint annual income was £27,003.00. This further reduced your entitlement to £676.30 which was shown on your award notice dated 22 May 2006.
Your entitlement was £676.30 you received payments totaling £1,094.88.
This means you were overpaid by £418.58 which is the difference between the amount we paid you and the amount you were entitled to receive.
2010-2011
I have found that the overpayment arose because of an increase in your joint annual income.
We sent you an award notice on 27 September 2010 stating that your tax credits award of £698.46 was based on your joint annual income of £29,655.00. The award notice and the accompanying TC602 (SN) guidance notes advised you about reporting changes in your family circumstances, including your income.
On 16 June you told us that your correct joint income was £32.220.00. this reduced your entitlement to £547.50 which was shown on your award notice dated 24 June 2011.
your entitlement was £547.50. we paid you £377.67. This is because we intended to recover £281.84 from this award. as your entitlement had reduced we only recovered £169.83 from this award leaving an outstanding overpayment of £112.01
Having looked at the reason for the overpayment, I have found that we met all our responsibilities as set out in our code of practice 26. For this reason, i cannot write off the overpayment and you will have to pay the money back
Iam new here through sheer desperation in an attempt to resolve an ongoing issue with HMRC over tax credits.
For several years we have been arguing with them regarding overpayments, but they still insist that monies have to be paid back to them. We have always contacted HMRC when changes in our circumstances occur, but still find ourselves in a position where we now owe over 5K.
My family is at breaking poit with this as we do not know where to turn as HMRC are now demanding full payment within 30 days becuase our entitlement to tax credits was reduced to £0 six months ago. We have tried to address the problem with HMRC, but our reasons have been rejected.
To make matters worse, HMRC have sent us another letter this week saying they may have made a mistake and that we could now be entitled to tax credits as there was a reduction in income last year. we are so frightenend about claiming any money that we are not going to rspond to this.
Below is some of the resonse letter from HMRC. If there is any help that someone can offer, we would be very grateful
Thank you for completing the form TC846 asking us to look at tax credit overpayments for tax years: 2003-2004, 2004-2005, 2005-2006, 2010-2011 and to consider whether you should have to pay it back.
2003-2004
Your initial entitlement to tax credits was £2,717.36 working tax credit and £3,436.74 child tax credit based on your joint annual income of £7,578.00. this was shown on your award notice issued to you on 02 May 2003
I have found that the overpayment arose on 14 may 2004 when we were told that your annual income had changed.
When we updated our records with this information, yours and your partner's income was not included. This meant that your award was recalculated using an income figure of £0.00. This increased your entitlement to £3.026.82 WTC and £3,436.74 CTC and, as a result of this your payments increased. We are sorry about this mistake.
We sent you an award notice dated 17 May 2004 which stated the annual income we had used to calculate the amount of tax credits you were receiving. We asked you to check the personal information on your award notice and tell us if anything was wrong, missing or incomplete.
On August 16 2004 you told us about this mistake and we amended our records to include your income of £18.200.00 and your partner's income of £6.000.00. Because of this, your entitlement reduced to £0.00 WTC and £545.34 CTC.
This means you were overpaid by £5,918.22, which is the difference between the amount we paid you and the amount you were entitled to receive.
We have recovered £2,891.40 from other awards, leaving an outstanding overpayment of £3,026.82
2005 -2006
I have found that the overpayment arose because off an increase in your joint income
Your award for tax credits was WTC £0.00 and CTC £3,787,65 this was based on your joint annual income of £15.273.00
On 06 August 2005 we were told your correct annual income was £24,000.00 this reduced your entitlement from £3,787.65 to £862.41 which was shown on the award notice issued to you on 08 August 2005. The award notice and the accompanying TC602 (SN) guidance notes advised you about reporting changes in your family circumstances, including your income.
On 15 May 2006 you told us that your correct joint annual income was £27,003.00. This further reduced your entitlement to £676.30 which was shown on your award notice dated 22 May 2006.
Your entitlement was £676.30 you received payments totaling £1,094.88.
This means you were overpaid by £418.58 which is the difference between the amount we paid you and the amount you were entitled to receive.
2010-2011
I have found that the overpayment arose because of an increase in your joint annual income.
We sent you an award notice on 27 September 2010 stating that your tax credits award of £698.46 was based on your joint annual income of £29,655.00. The award notice and the accompanying TC602 (SN) guidance notes advised you about reporting changes in your family circumstances, including your income.
On 16 June you told us that your correct joint income was £32.220.00. this reduced your entitlement to £547.50 which was shown on your award notice dated 24 June 2011.
your entitlement was £547.50. we paid you £377.67. This is because we intended to recover £281.84 from this award. as your entitlement had reduced we only recovered £169.83 from this award leaving an outstanding overpayment of £112.01
Having looked at the reason for the overpayment, I have found that we met all our responsibilities as set out in our code of practice 26. For this reason, i cannot write off the overpayment and you will have to pay the money back
0
Comments
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You might be able to get some of the 03/04 written off, but only a very small part because most of it was caused not by HMRC's mistake but by the income increase from 7k to over 24k.
Similarly for other years, if HMRC are correct about when you notified the income changes, then providing they have applied the disregards correctly the overpayments would stand.
The way the tax credits system is designed means that overpayments can occur due to income changes even if you notify straight away.
You don't need to pay it back in 30 days though. Contact DMB, and you can arrange a time to pay over a period that is affordable for you. If you can't afford the minimum (£10 a month) then you can ask them to suspend recovery or write it off for financial hardship.
IQ0 -
We had a similar problem [a very long story] to cut it short HMRC had deleted my husbands earnings the year he was made redundant, which meant they were overpaying us [all their mistakes]. Anyway we lost our appeal but due to MP's involvement and our circumstances we were paying back our arrears by small stoppage from our current payments. Then 2 years later we get a cheque for a refund of the re-payments we had made [took responsibility for some of their mistakes] BUT a demand for the other half we owed [why they didn't pay the arrears with the refund is beyond me?] BUT this was my cue to fight them again and it took 3 appeals to win. The last one I won because I was fortunate to get the direct telephone number of an advisor [rather than the useless 'helpline'] who listened to previous telephone conversations I had had and told me the exact one to reference where I had informed them they had not included my husbands earnings and the payments were too high. We had a very stressful 4 1/2 years over one stupid mistake where an advisor changed my hubby's dob to the current date and sent their computer into meltdown. But in the end perseverance and sheer bloody mindedness on my part meant we got to keep all the overpayments.0
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We had a similar problem [a very long story] to cut it short HMRC had deleted my husbands earnings the year he was made redundant, which meant they were overpaying us [all their mistakes]. Anyway we lost our appeal but due to MP's involvement and our circumstances we were paying back our arrears by small stoppage from our current payments. Then 2 years later we get a cheque for a refund of the re-payments we had made [took responsibility for some of their mistakes] BUT a demand for the other half we owed [why they didn't pay the arrears with the refund is beyond me?] BUT this was my queue to fight them again and it took 3 appeals to win. The last one I won because I was fortunate to get the direct telephone number of an advisor [rather than the useless 'helpline'] who listened to previous telephone conversations I had had and told me the exact one to reference where I had informed them they had not included my husbands earnings and the payments were too high. We had a very stressful 4 1/2 years over one stupid mistake where an advisor changed my hubby's dob to the current date and sent their computer into meltdown. But in the end perseverance and sheer bloody mindedness on my part meant we got to keep all the overpayments.
Well done for winning in the end. However, it sounds like you won because you did tell HMRC that they had made a mistake.
In this case, as I said before, HMRC did make a mistake, but because income was only at 7k before the mistake it won't have made a huge overpayment. The big overpayment was because of the rise between 7k and 24k and whether the OP can dispute that depends on what they told HMRC and when.
IQ0 -
Thanks to both icequeen and linclass for your responses. We informed HMRC as soon as there were any changes in income and thought that was the right thing to do. I guess my failure is to study the award paperwork correctly. Becuase it looks so beurocratic and complicated, I just accepted what it said and didnt even consider addressing any mistakes because I was not aware that there were any.
Knowing I can pay a minimum £10 a month is welcome news, as my salary has now once again dropped so we would certainly struggle to pay anything like what they are demanding.
Do you how I will know if they have applied the disregards ? I have read a bit about this and if I am correct, this is 10K ? There is no mention of this in the HMRC letter I received this week rejecting my appeal.
I will appeal further, but need to structure the letter (if anyone can help).
I will address the mistake they made in the 2003-2004 calculations and also address why our contact with HMRC was not acted upon when our income circumstances changed
Thanks again for your responses0 -
Icequeen99 wrote: »Well done for winning in the end. However, it sounds like you won because you did tell HMRC that they had made a mistake.
In this case, as I said before, HMRC did make a mistake, but because income was only at 7k before the mistake it won't have made a huge overpayment. The big overpayment was because of the rise between 7k and 24k and whether the OP can dispute that depends on what they told HMRC and when.
IQ
The jump from 7K to 24K was when I found work after being unempolyed (my wife earned the 7K). As soon as I started work we contacted HMRC to advise them of this0 -
We had a similar problem [a very long story] to cut it short HMRC had deleted my husbands earnings the year he was made redundant, which meant they were overpaying us [all their mistakes]. Anyway we lost our appeal but due to MP's involvement and our circumstances we were paying back our arrears by small stoppage from our current payments. Then 2 years later we get a cheque for a refund of the re-payments we had made [took responsibility for some of their mistakes] BUT a demand for the other half we owed [why they didn't pay the arrears with the refund is beyond me?] BUT this was my queue to fight them again and it took 3 appeals to win. The last one I won because I was fortunate to get the direct telephone number of an advisor [rather than the useless 'helpline'] who listened to previous telephone conversations I had had and told me the exact one to reference where I had informed them they had not included my husbands earnings and the payments were too high. We had a very stressful 4 1/2 years over one stupid mistake where an advisor changed my hubby's dob to the current date and sent their computer into meltdown. But in the end perseverance and sheer bloody mindedness on my part meant we got to keep all the overpayments.
so glad you beat them in the end .... they do not seem very sympathetic at all (even when their own are screwing the system ... sorry, rant over). I am prepared for a long battle0 -
thelaststraw wrote: »Thanks to both icequeen and linclass for your responses. We informed HMRC as soon as there were any changes in income and thought that was the right thing to do. I guess my failure is to study the award paperwork correctly. Becuase it looks so beurocratic and complicated, I just accepted what it said and didnt even consider addressing any mistakes because I was not aware that there were any.
Knowing I can pay a minimum £10 a month is welcome news, as my salary has now once again dropped so we would certainly struggle to pay anything like what they are demanding.
Do you how I will know if they have applied the disregards ? I have read a bit about this and if I am correct, this is 10K ? There is no mention of this in the HMRC letter I received this week rejecting my appeal.
I will appeal further, but need to structure the letter (if anyone can help).
I will address the mistake they made in the 2003-2004 calculations and also address why our contact with HMRC was not acted upon when our income circumstances changed
Thanks again for your responses
Firstly, what you are doing is disputing and not appealing - better to use the term dispute when you deal with HMRC so as not to cause confusion.
The disregard is 10k now, but in 2003-2004 it was only 2.5k. It increased to 25,000 in 2006-2007 and the decreased in 2011/12 to 10,000.
In 8 years of dealing with tax credits, I have never seen a case where the disregard wasn't applied as the system does it automatically. The only way of checking would be to look at final actual income for each year from 2001-2002 all the way through.
I would concentrate on that 2003/2004 error (but as I say the main contribution was the 24k income).
If you were paid on the basis of 7,000 and then reported your income as 24k at the end of the year - did you contact them mid year to say your income had gone up.
There is no harm with continuing to dispute, but these income ones are the hardest to win because HMRC haven't made the mistake normally.
IQ0 -
Yes, I contacted them as soon as I started work. So they were aware that one day our income was 7k (my wifes income) and the next it would be 24k (joint income)Icequeen99 wrote: »Firstly, what you are doing is disputing and not appealing - better to use the term dispute when you deal with HMRC so as not to cause confusion.
The disregard is 10k now, but in 2003-2004 it was only 2.5k. It increased to 25,000 in 2006-2007 and the decreased in 2011/12 to 10,000.
In 8 years of dealing with tax credits, I have never seen a case where the disregard wasn't applied as the system does it automatically. The only way of checking would be to look at final actual income for each year from 2001-2002 all the way through.
I would concentrate on that 2003/2004 error (but as I say the main contribution was the 24k income).
If you were paid on the basis of 7,000 and then reported your income as 24k at the end of the year - did you contact them mid year to say your income had gone up.
There is no harm with continuing to dispute, but these income ones are the hardest to win because HMRC haven't made the mistake normally.
IQ
"dispute" it is ......
thanks again icequeen0 -
thelaststraw wrote: »Yes, I contacted them as soon as I started work. So they were aware that one day our income was 7k (my wifes income) and the next it would be 24k (joint income)
"dispute" it is ......
thanks again icequeen
Ok, well that is what you need to say in the dispute. But they normally just come back and say fine, we made the mistake in not changing it BUT you didn't tell us of the mistake on the next award notice (or that you didn't tell them you didn't get a notice or let them know your payments hadn't changed).
IQ0 -
Icequeen99 wrote: »Ok, well that is what you need to say in the dispute. But they normally just come back and say fine, we made the mistake in not changing it BUT you didn't tell us of the mistake on the next award notice (or that you didn't tell them you didn't get a notice or let them know your payments hadn't changed).
IQ
its not looking good then ?0
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