Over payments of tax credits

leighblue

I went bankrupt last week, and am due to have a telephone interview with the OR tomorrow.

I have completed the income/expenditure form, which shows the current level of tax credits we receive, along with earned income, HB etc. However the figure for the tax credits is wrong as my income has risen since last year.

I rang the tax credits helpline a few weeks ago to tell them what my current income is, and they have given me a new award letter. However they haven't dropped my award for this year as my income hasn't risen by £10,000, but they have said from April 2013 our award will fall by £200 per month. Using their calculator, I worked out our credits should have fallen by about £175 pm, so I assume that £25 is clawing back the overpayment.

Judging by other threads on here, I think its borderline if an IPA will be put in place. Based on the true amount of tax credits I should receive I think I would definitely avoid an IPA.

My question is, will the OR accept this lower level of tax credit income, as in theory I am borrowing £175 pm from the tax credits, which will need to be repaid over a number of years? Also my work is fairly seasonal, so my income will fall after Christmas. I have used an average of my last 6 months wages as my stated earned income. Can I string out the OR till April by refusing to sign an IPA (assuming they don't accept my argument) as my then average earned income and tax credits will be significantly lower.

Thanks in advance for any help you offer.

IF

Not a 100% sure Leigh, bumping your post up the board.

Best wishes
IF...x

debt_doctor

Hi,
Your Insolvency Service Examiner will use the tax credits and other incomes you actually receive at the time of your interview for the purposes of IPA calculation.
I understand what you mean about how your tax credits are calculated, they work on the previous years income, which means whilst you will receive an overpayment, because it is based upon an in year increase of less than £10k (£2.5k from next year) then the overpayment is not recoverable.
The Examiner will not venture in to the complexities of the tax credit system, they will simply use the amount you receive at the time of your bankruptcy with a view to amend any given IPA at an appropriate time.

I also think you would be well advised to put the fact in writing to HMRC (sent recorded delivery) that you have informed them' in year' of your income increase and ask them to confirm that the overpayment that will occur as a result will not be required to be repaid.
This is for two reasons;
1) tax credits are the most appaulingly managed benefit system in history, and I would not trust anything where I could not prove that I did everything I could.
and
2) If a tax credits overpayment is demanded after the date of your bankruptcy then you will still be responsible for it, even though the overpayment is occurng right now.

DD

jayne60

My bankruptcy was in may 2012, I had an amended award notice in the feb and was told I had an overpayment of 1500, I then received my final award in the june, stating what I owed them and what i will pay back, I disputed this as I had the proof that my overpayment was calculated before my final waward notice, they said no, I still had to pay this. I got in touch with national debt line and due to the ruling Payne v cooper, wtc overpayments had to be deemed as unrecoverable and tax office was to be treated as any of my other debtors were. Also because I had evidence that my over payment had been worked out in the Feb before my bankruptcy and before the final award notice I contested againg sending a copy of the email national debt line had sent me, finaly after 4 months they have stopped taking the overpayment off me till they make a final decision!!, your story sounds very similar to mine ( on the overpayment bit) so contest it.

moneymakestheworldgoround

Very interesting - thanks