Tax Credit Investigation

SuziQ

I am currently in the throes of trying to stop HMRC taking me to court for tax credit overpayments and the following info may help you.

My earnings varied over 3 years by less than the allowable income disregard each year.

On every occasion when my earnings increased I telephoned tax credits office, advised them of the increase and queried why my payments weren't reduced - on several occasions the notfied change actually triggered an additional payment. I was told numerous times that payments don't change immediately in order to provide some transitional relief - even though my expected earnings were rising not falling. They never mentioned the income disregard but I believe this was the reason why my TCs weren't stopping.

The income disregard was raised to £25k in 2007 by demands from the opposition when HMRC were taking 000's to court who had been innocently over paid by HMRCs incompetencies.

Now the s**ts are in power they are using austerity measures and the backlash against anyone claiming any benefit, to start reducing the income disregard and target the recovery of tax credits overpayments again.

Even the tax credits office doesn't understand the income disregard with many of them thinking that it is only there to smooth out payments when income changes and that if you're overpaid they will get it back.

This is not the case, if you advsed the TCO of changes to your income in good faith you could rightly have expected them to pay you the correct amount and you owe nothing.

If you are threatened with revovery of a tax credits overpayment you should complete a 'Request to Reconsider Recovery of Overpayment' (RRR) form, also called a TC846' and follow the process at http://taxcc.org/dispute1.htm

The law in the UK allows HMRC to get county court judgements on the flimsiest of evidence so make sure they at least follow their own rules and demand that the income disregard be taken into account and used to negate your overpayment.

Maybe the investigation is linked to your earlier problems with them?

Lou76

bikeman wrote: »

I was referring to ISAs and premium bonds - I don't think either can generate income.
Also what business is it of theirs how much my house is worth, how big my mortgage is, how much I spend on utilities, how much my car is worth - none are relevant to tax credits. It is not like I am claiming any means tested benefits.

More of an issue is why the !!!!!!s dont answer their phone and give me such a short deadline.

Also I'm not sure I want all my account numbers scanned and held online by a gov dept. God only knows where it will end up.

BIB: Is that not what Tax Credits are, a means tested benefit?

Or can anyone claim them, regardless of their means?

SuziQ

You're right Lou, they are means tested. That is why we have to tell them our income.

Wail

bikeman wrote: »

I am inclined to bin it.

You know all those Tax Credits you were entitled to. You are no longer and have not been entitled to them. Please repay them now.

My advice is to fill the forms in to the best of your ability. Keep copies as well before you send them.

Lou76

SuziQ wrote: »

You're right Lou, they are means tested. That is why we have to tell them our income.

Sorry Suzi, I was being facetious in my reply.

It just annoys me when people look down their nose at people [hard on their luck. or otherwise...] who claim means tested benefits, all the while they're sat on their [tax payers, via tax credits] "income". :mad:

End of rant...:rotfl:

charlotte4940

are you claiming as single or a couple? and do you have any children?

Are you declaring a low income? if this is the case they might want to see if your income and expenditure match up. if your outgoings are more than you incomings they will want to know where the extra money is coming from. Maybe they think you are not declaring enough on your tax return and what to check that everything is in order.

shedboy94

bikeman wrote: »

Hi

I have been selected for a tax credit investigation. No reason has been given and I have repeatedly made unsuccessfull attempts to contact the investigating dept on the tel number provided.

They want to see all statements in a 3 month period last year, but have not informed me what is their interest in this specifc period.

They have given me only 21 days to provide original copies of all documents. This presents a problem since all my banking is online so I don't even have printed statements. I can print statements but only up to 90 days previous, so they don't cover the period in question.

They have also sent me a 'income and expenditure' form but haven't specifically asked me to complete it in their letter. I am inclined not to do so, not because I have anything to hide but because it requests irrelevant information such as the value/ownership of my property, car, my outgoings and details of any tax free savings such as premium bonds and ISAs. None of these are relevant to a tax credits claim and they are not requirted to be reported to HMRC in any tax return. I am inclined to bin it.

Does anyone have any experience of this? Thanks

What you have been told is completely true, they are looking to see if your lifestyle matches your income. General experience on tax credits is that the majority of s/e workers claiming tax credits work high hours, but declare low incomes. Premium bonds/savings, while not relevant to the income side of tax credits are relevant because if you are consistantly declaring a low income, but you have high savings, then HMRC will ask where the money is coming from that you are managing to save.

They may also be checking to see if you have been financially independant (ie no undeclared partner who may be contributing to household bills)

bikeman

miduck wrote: »

They look at things like this to see if a claimant's outgoings do not match what they declare as income. For instance, it would be unrealistic for someone earning £5,000 a year to be driving a top of the range car.

I think you mistake means tested benefit claims with tax credits. Tax credits are based upon income and number of children not assets such as such as owning your own home or driving an expensive car. Neither are they adjusted for non-taxable savings such as ISAs & premium bonds.

If I chose to put all my capital into my home and non-taxable savings thereby reducing my declarable income and then periodically dispose of ISA/Premium bonds to fund top of the range cars, holidays etc that is my business. It's within the rules.

I am sure that the coalition will do everything they can to ensure that those like me who fall on hard times will be required to spend every penny they've got, sell their house etc before they can claim a penny. But that is not the current rules.

No one should assume that my lifestyle hasn't changed and that these assets were aquired on present income.

The only time this becomes relevant is if this becomes a tax avoidance investigation. Only then would I need to show how these assets were acquired.

In my case my tax credits claim is based upon being single with two children (cant lie about that). I do hold premium bonds/ISAs; they were purchased over many years when I earnt well. Now my income is low I do have to cash them in periodically to survive. My claim is valid and I should have nothing to worry about. I just dont like the intrusion.

Unfortunately despite repeated attempts I haven't been able to talk to them. Their phone just rings endlessly. If I could understand from them what has prompted this I would be better able to address their concerns.

MissMoneypenny

bikeman wrote: »

I think you mistake means tested benefit claims with tax credits. Tax credits are based upon income and number of children not assets such as such as owning your own home or driving an expensive car. Neither are they adjusted for non-taxable savings such as ISAs & premium bonds.

Which is why they are an income based welfare payment. If you can't afford to keep yourself or your children, then you apply for benefits (in your case Tax Credits) and the welfare state gives you money. Your lifestyle should reflect the fact that you need to claim income based welfare payments. HMRC have a duty to the taxpayer to check claimants and He who pays the piper, calls the tune.

The anomaly of Tax Credits not being asset based is (rightly) being addressed. Tax Credits are going and will be replaced by Universal Credit; which is means tested. There will also be other conditions with UC such as the minimim wage claimants are expected to earn.

LunaLady

If you dont like the intrusion, you could always just not claim.