Tax credit Overpayment....Please Help !

studentnurse

Wonder if any of you would kindly offer me some advice.
I live with my partner and we have one child.
In tax year 02/03 my partner was awarded childrens tax credit and recieved this payment through his employer/salary (PVE?)
Tax year 03/04 this payment continued, however I was also getting this money paid directly into my bank. We thought/assumed that his tax code would change and he would stop getting this allowance in his salary. We did not notice at the time that he was still recieving this as the amount was so small (£40.00 per month) and he does not have a stable salary due to company contracts etc.
Last year we recieved notification that my partner had underpaid £554.75 but that they would begin taking payments at a later date.
He has been payed today and his tax code has changed from 474L to 237L. I assume this is because they are recovering his underpayment.


I have looked through all the other threads on the site containing info on tax credits and have a list of questions to put to the tax office when we contact them tomorow :

Can they spread the recovery over 2yrs?
Did they send my partners employer a reduced tax code in 03/04?
If not is this their fault?
If they did is it the fault of the employer? Should/Could they be liable for the overpayment? (he no longer works for the same company - i dont know if that matters)

We are really in a pickle and can not afford to live with this reduced tax code.
Will this reduced tax code be inforce for the whole year? Or just untill the overpayment is cleared?

If you have any advice then please reply .....I would like to be well armed with valid information when we call them tomorow.

studentnurse

Just thought Id add we both work full time and get no other types of money from the government (apart from family allowance )
I am a full time student seconded from my employer.

Spendless

Hi

I don't know how much this will help but the childrens tax credit came in in April 2001 replacing the married mans allowance which ended April 2000. As you say it was payable thru your tax code.

The childrens tax credit ended April 2003 when the child tax credit came in and this went into your bank account. It sounds like you are only eligible for the family element of £545pa- which works out around £40 a month. What should have happened is you were £40 a month down on salary and £40 up in your bank account (this is what happened to my sis and BIL).

Sounds like you received both, hence the change in tax code. I would guess that the code would remain till the money has been paid back but I'm definately no expert. Have you rang your tax office to see how long they say the code will remain in place?

studentnurse

Youve got it right, we are only eligible for the basic amount. We basically got £40.00 in pay packet and in bank account but didn not realise this at time. Surely the employer and the tax office have a responsibility to ensure that the PVE (payment Via Employer) is stopped when direct payment starts????

Have not rang them yet, gonna ring them tomorow.

Wondering if they will maybe stop our credit award that is being paid into my bank and not recliam it through partners tax code? They seem to be taking an awfull lot more than £40.00 per month from his wages.

Thanks for your reply x

Spendless

studentnurse wrote:

Youve got it right, we are only eligible for the basic amount. We basically got £40.00 in pay packet and in bank account but didn not realise this at time. Surely the employer and the tax office have a responsibility to ensure that the PVE (payment Via Employer) is stopped when direct payment starts????

Have not rang them yet, gonna ring them tomorow.

Wondering if they will maybe stop our credit award that is being paid into my bank and not recliam it through partners tax code? They seem to be taking an awfull lot more than £40.00 per month from his wages.

Thanks for your reply x

I don't know because you were paid the correct money into bank account. It's the wages that were incorrect, so not sure how they'll rectify it.

We are only entitled to the family element too and I don't re-call us having to do anything other than fill the forms out for CTC. My hubby had a pay rise in April 2003 so I've never been able to comment on how his wages changed at that point. It was my sister who told me that BIL wages was £40 down and her bank account £40 up.

Good Luck
x

studentnurse

Can anyone tell me will it only be the £554.00 we have to repay ? Gonna ring them but worried and cant get it out of my mind

Savvy_Sue

studentnurse wrote:

Can anyone tell me will it only be the £554.00 we have to repay ? Gonna ring them but worried and cant get it out of my mind

It's possible there's been some other underpayment as well, so the best thing is to ring them. They can't reclaim more than £554 if that's all the overpayment was.

If it is just the £554 that does seem a very steep drop in the tax code but they are usually very helpful about explaining such things. There have been other threads about appealing against having to repay for their mistakes, although if the underpayment has arisen because employer has made a mistake that would be a different situation.

Your OH doesn't now have a company car, does he? That would reduce his tax code!

Spendless

There's a thread in the cutting tax board about underpaid tax. It gives an explanation as to why a code is low when you are paying tax back.

It also says that the money will be claimed back from yourself regardless of who made the mistake - sorry.

studentnurse

No company car.

Spendless - thankyou. I have read most of the threads on this board about tax (took me hours !) but if the fault is due to an administrative error then there have been cases (on this board) where the underpayment has been written off.


Ringing them after school run !

irs101

The key thing here, as Spendless said previously, is that this is a PAYE error not a tax credits error. The Code of Practice that says that you don't have to pay back for Official Error only covers tax credits - and these have been paid correctly in your case. I don't know what the relevant rule is for PAYE, but I suspect they are entitled to reclaim it (although it is certainly an odd error because loads of people were in the exactly the same situation is as you). I suspect IR would also argue that you had the information available that would enable you to realise that it was a mistake (TCs were being paid into your bank account and you knew your tax code).

Tax codes are only an approximation anyway to enable you to roughly spread you income tax allowance evenly over the whole year - an adjustment after the end of the tax year is always possible.

irs

studentnurse

Thanks for everyones advice and replies. Spoken to the tax office and its all been sorted. We do have to pay back the underpayment, but it is only the £554.00.
Think we both panicked a wee bit when we seen tax code and cos OH had done so much overtime in the last month it loked like the tax people were taking a mega lump sum every month ! I feel sooooo relieved now, thanks guys xx