Need Advice Regarding £2743.93 "Overpayment" - HELP!

shedboy94

kevmcfad wrote: »

:eek: I need help fast because as it stands at the moment HMRC are demanding that an overpayment of £2743.93 is paid immediately. :eek:

Long thread sorry!

Several months ago I received my tax credit renewal which I filled in and submitted before the deadline. A few weeks later I received a letter informing me about the "overpayment". This shocked me because I don't have that kind of money lying around and I couldn't understand why there was such a high amount of overpayments. I called HMRC when I received this letter (which was after the 31st July deadline) to find out why this was the case and it was only then that I realised the error.

This award was a joint application with my wife who is employed. The renewal form asked for her INCOME so I copied over her income amount from her most recent P60 to ensure accuracy, however I am self employed and this is where the problem came from. My most recent self assessment has been submitted to HMRC so I know my exact income. Again I wrote my INCOME into the appropriate section of the renewal form before submitting it - This is what the form asked for after all. When I phoned HMRC in August to gain clarity regarding the overpayment the man I spoke to informed me that I should have wrote my NET INCOME into the appropriate section of the renewal form. I asked him if this is what caused the overpayment and he said "yes". He also informed me that he'd raise this issue with his manager.

On 5th September I received a letter from HMRC informing me that "you cannot appeal against this decision to pay back an overpayment". I immediately called them and spoke to "Emma" and again I explained my problem but she was having none of it. She informed me that the £2743.93 overpayment was for the last tax year and there was nothing I could do to reverse the decision unless I went out my way to fill in dispute forms and hope that HMRC wiped my overpayment. :mad:

FYI My gross income for last year was around £25500 but my net profit was only £10914, hence the mistake. It may also sound that I received a big monthly payment from HMRC last year but I didn't because they were clawing back the "overpayment" I made from the previous year!

In my opinion the renewal form is very misleading and this meant I inputted the wrong figure into the "Income" box, even though I tried to be as accurate as I can and whenever there is a change to my family's circumstances I always immediately inform HMRC to ensure accuracy regarding my tax credit payments. As far as I'm concerned the term "income" means gross income (or takings) and NOT "net income" unless it specifically says which the renewal form did not!

This is a very worrying time for my family as I only work part time hours (my income has reduced massively since last year) and my wife doesn't work full time hours either. We have 2 young children, we are constantly living in our overdraft even after my wife gets paid and a few days ago I went to the supermarket with 50p in my pocket to buy a 47p Tesco value loaf of bread. There is absolutely no way we can afford to pay back this amount of money, even in instalments, and I will fight this as much as I can but I do need as much advice as I can to help us.

We would really appreciate anyone's help.

1. Why are you mentioning staff names in your thread - it has no relevance.
2. The guidance notes that come with the renewal pack clearly state what income to declare.
3. The error is not one made by HMRC, therefore it is unlikely the decision will be reversed as ultimately it is your responsibility to ensure the information you provide is correct.
4. Once a claim is finalised after the 31st July deadline, it is very rare that the income can be amended - normally only if it is an HMRC error.

Icequeen99

shedboy94 wrote: »

1. Why are you mentioning staff names in your thread - it has no relevance.
2. The guidance notes that come with the renewal pack clearly state what income to declare.
3. The error is not one made by HMRC, therefore it is unlikely the decision will be reversed as ultimately it is your responsibility to ensure the information you provide is correct.
4. Once a claim is finalised after the 31st July deadline, it is very rare that the income can be amended - normally only if it is an HMRC error.

I agree on points 1 and 2. But it isn't correct to say that it cannot be amended and that it is rare after 31st July deadline. After 31st July deadline, HMRC's power to amend is reduced and it can only done under Section 21 (official error) which as you say doesn't apply here, compliance investigation (probably wouldn't happen) or appeal.

Claimants with income errors can simply appeal. I did tell the OP that originally. There is no requirement that you can only appeal if you didn't make the error.

IQ

shedboy94

Icequeen99 wrote: »

I agree on points 1 and 2. But it isn't correct to say that it cannot be amended and that it is rare after 31st July deadline. After 31st July deadline, HMRC's power to amend is reduced and it can only done under Section 21 (official error) which as you say doesn't apply here, compliance investigation (probably wouldn't happen) or appeal.

Claimants with income errors can simply appeal. I did tell the OP that originally. There is no requirement that you can only appeal if you didn't make the error.

IQ

I agree, he can appeal, however it is unlikely to be changed as it isn't official error.
I never said it cannot be amended, merely stated that unless it is official error, it is unlikely.

Pedent

missbunbury wrote: »

I don't get it, wouldn't they have paid you less if you had overstated your income? I thought the self-employed were encouraged to overestimate in order to avoid overpayments?

This has been puzzling me too. Other things being equal, the more you earn the less you get. If the OP gave their turnover rather than their profit, then I see how that could result in them getting less than they should have, but don't see how it could result in them getting more than they should have.

Icequeen99

shedboy94 wrote: »

I agree, he can appeal, however it is unlikely to be changed as it isn't official error.
I never said it cannot be amended, merely stated that unless it is official error, it is unlikely.

Where in the TCA 2002 does it say that an appeal can only be successful if there is official error? Official error does not come into appeals. Appeals look at entitlement and not about the rights and wrongs of why the claim was wrong.

Official error comes under Section 21 and is entirely different.

So no, if you are in the time limit for appeal it isn't unlikely, it will be amended if the OP has evidence to show the entitlement is wrong (in this case because the income figure is wrong).

IQ

Icequeen99

Pedent wrote: »

This has been puzzling me too. Other things being equal, the more you earn the less you get. If the OP gave their turnover rather than their profit, then I see how that could result in them getting less than they should have, but don't see how it could result in them getting more than they should have.

It can happen depending on the incomes around it.

Say for example that in 10/11 income was £20,000 .Then in 11/12 claimant estimated income was going to be £15,000. However when he renews he gives wrong figure (turnover) of £20,000. They would finalise 11/12 on £20,000 and there would be an overpayment because the £!5,000 estimate was too low.

However, if it was corrected to net profit of £15,000 the overpayment would disappear.

IQ

shedboy94

Pedent wrote: »

This has been puzzling me too. Other things being equal, the more you earn the less you get. If the OP gave their turnover rather than their profit, then I see how that could result in them getting less than they should have, but don't see how it could result in them getting more than they should have.

Quite easily - if they had given an est of say £10000, they would have been paid TC's based on those earnings, however if an income of say £25000 was declared at the end of the year then the system would calculate how much they should have got on those earning, and being a much higher amount, the payments should have been less -hence the o/p.

eg - TC's paid on £10000 est - £5000
TC's awarded on £25000 actual - £2000
= £3000 o/p