Need some help £10,000 over-payment and rejected application

JustTryingToHelp

Hello everyone, I am trying to help out some friends who have gotten themselves in to a little trouble.

Let’s call them Link and Zelda, they are currently married and have a child less than 1 year old.

Problem 1 - £10,000 over payment
Long Version:
Now I think they started claiming working tax credits around 2009. Child not yet born. Both self-employed and are doing leaflet distribution. They didn't have a problem claiming. Come the time for renewal they either didn't get the renewal pack or they got it and didn't send off the annual tax credit declaration. (How likely is it that it got lost in the post?)

So then their working tax credit gets stopped and they are billed for all the tax credit money they have been given, called an over-payment. They call up HMRC and didn't get a clear answer on how they should proceed next.

They both find this scary & confusing and decide it would be best to take this matter to an accountant. The accountant takes their money and just helps them to make a new claim (which they could have done by themselves).

The new claim gets approved. Link and Zelda now think because the new claim is approved the over-payment has now been annulled. Little do they know, it's still there.

Somehow they keep on missing this annual declaration all the way to 2013. Every time their working tax credit gets stopped and are billed for everything they’ve been given plus all the over-payments from before. Every time they think everything is fine once their new claim has been approved. Now years of over payments have been stacked on top of one another resulting in a bill for £10,000.

JustTryingToHelp wrote:

There is also something else I have purposely withheld that could explain why they didn't send the renewals. The couple in question are Bulgarian nationals that arrived in 2005. I withheld this information because I did not wish for anybody's prejudices to discourage them for aiding me in this. Its become apparent to me now I can't hide this and give a full explanation. I will amend this detail in my initial post.

Because their English reading/writing is on a basic level they were able to fill in the claim forms, but when it came to the various other letters it becomes more of a jumble for them.

So back to the first renewal they didn't send. Their tax credit gets stopped. They get the letter asking them to contact HMRC due to a late annual declaration but don't understand it, all they know is that is says "your tax credits have been stopped". They take the issue to an accountant. Accountant just fills in a new application, tells them the issue with HMRC asking for the money back is now resolved. The couple's mindset is now "if my new application gets approved then everything is sorted" at no point did they understand how important returning that renewal pack is nor did they understand the over-payment is still lingering in the background.

Then every time their tax credit gets stopped they have suspicions that the UK government are discriminating against them for their nationality.

I've explained to them this isn't likely to be the case because its just a bunch of office administrators who are told to work to a set standard, where any official discrimination would likely get leaked to the public. This is just something I told them recently, so for all the times when their tax credits were stopped they were thinking "I'm being discriminated against" which gives possible reason for why they may not have trusted the HMRC letters sent to them.

They also have an incorrect understanding of the appeals process. They think that if they appeal then they have to wait 5-6 months for everything to get sorted out and they cannot make a new application for tax credits while the appeal is taking place. So they never bothered making an appeal.

Some time before May 2013 Link and Zelda went to the Citizens Advice Bureau to get help on this over-payment. They filled out a dispute form for it and then in May 2013 the dispute was rejected. I don't know on what grounds but it’s my assumption that the person at the CBA didn't have all the details and found the whole situation terribly confusing as well.

Short Version:
They missed sending in the annual declaration every single time for 4 years. Partly their fault, maybe it was HMRC's fault for not sending or getting lost in the post. Resulted in them being billed for all the tax credits given to them. Dispute has already been made and rejected, they didn't make the dispute personally, it was done by CBA.

How I will handle it:
I have called HMRC and I've been told they need to appeal against the decision for rejecting the dispute. Now I'm going to try to tackle this on 2 points.

• They do not owe this money because they were originally entitled to it. Due to a series of mishaps some of which were their own fault and some the fault of others; the rules were broken, but at no point did they not deserve the money given to them.
  
• They cannot possibly pay all this money back without suffering considerable hardship for X amount of years. I have not yet calculated how long it would take them to pay this back with the disposable income they have but I suspect it’s going to be a very very long time. I saw the self-assessment (2013) for Zelda and it said she made around £7000 profit for that year, didn’t see Link’s.

What I need help with:
I need help on how I go about proving points 1 and 2, or if you have any better ideas I would also like to hear them.

Problem 2 - Current claim is rejected
Long version:
2013 - Zelda, self-employed working around 30 hours per week distributing leaflets, takes maternity leave, gets maternity allowance. October 2013 she makes a new application for working tax credits.

She thinks because she has been given proof of maternity allowance that its proof enough that she has been working. Wrong. She has not proved that she was working 30 hours per week before she took maternity leave and her application was turned down until she sent in the relevant invoices to prove it.

So she sends in 2 sets of invoices for the week before she took maternity. The first was from a shop let’s call it PizzaRut detailing 15 hours of work and the other for a shop lets call it BurgerPeasant detailing 15 hours of work.

The application is still turned down. Zelda told me she gets on the phone to one Mrs. Provan (real name) at HMRC who tells Zelda she can't get working tax credits while being on maternity leave. Now I think Zelda must have misheard her, because there is no way that's right.

So yesterday (19-Feb-2014) I get on the phone to the same person (after going through security questions and Zelda confirming I can speak on behalf of her) I ask why the application has been rejected.

I was told she cannot get working tax credits whilst she's on maternity. So I ask again "are you saying she cannot get working tax credits at the same time she is getting maternity allowance" and the response is "yes, she gets paid money from her maternity allowance and so she does not get tax credits" so I say "well I'm looking on the HMRC website right now and it says as long as she was working 30 hours per week prior to taking maternity then she is entitled" Now Provan's story changes, she tells me "well she doesn't even work 30 hours a week because the invoices she sent in only showed between 12-17 hours for PizzaRut"

At this point Zelda tells me that there are 2 sets of invoices stapled together and Provan didn't check the other set. Now it also shows on HMRC's records that these invoices were sent back on 02-Feb-2014 but as now (20-Feb-2014) they have still not got them back.

I know for a fact this invoice for BurgerPeasant exists because I am the owner of the business. I cannot personally confirm Zelda sent it because I wasn't there, I just find it highly unlikely she would forget to include it because getting these tax credits means a lot to her given her crappy financial situation.

With nothing left to go on I ask if appealing is the only way I can get this reversed, and of course the answer is yes and it normally takes 5 months. !!!!.

Short Version:
Zelda, new application for working tax credits. Got rejected, incomplete documents. Sent in the missing documents, 2 sets of invoices. Application still rejected.

The HMRC employee dealing with it seems somewhat incompetent for stating someone on maternity allowance cannot receive working tax credits, then when presented with evidence to contradict them they give another reason for rejection. They say there was only 1 invoice that was sent and the claimant didn't do enough hours. I am the business owner of the other invoice.

What I need help with:

• Is there any possible way I can get this resolved without them having to go through a 5 month appeal process?
  
• Do HMRC photocopy the documents they receive and it is possible for someone else to look at these invoices?
  
• If they have to go through the appeal process should they make a new application for tax credits again, right now, instead of waiting for 5 months for the appeal to get sorted out?

Thanks for reading if you've made it this far, I do hope I have made this as easy as possible to follow, because it was a big headache for me just trying to understand how the tax credit system works and then figuring out why the couple involved are in such big trouble.

patman99

Sorry, a couple of things just don't add up.
Couple claim WTC so they send in proof.
Couple forget to renew claim.
HMRC stops claim and tells them they have been overpaid and they need to repay everything they have been paid.

Now, from having had a claim stopped due to not reapplying, I know that HMRC do not simply go 'Ok then, you will repay everything we have paid you so far'. The only overpayment they will be interested in is the amount paid from the date the pay period finished and the time they actually stopped paying the claim.

davehughes182

patman99 wrote: »

Sorry, a couple of things just don't add up.
Couple claim WTC so they send in proof.
Couple forget to renew claim.
HMRC stops claim and tells them they have been overpaid and they need to repay everything they have been paid.

Now, from having had a claim stopped due to not reapplying, I know that HMRC do not simply go 'Ok then, you will repay everything we have paid you so far'. The only overpayment they will be interested in is the amount paid from the date the pay period finished and the time they actually stopped paying the claim.

If a claimant does not renew their claim then they are required to pay back everything they have received from 6th April that year as an overpayment unless their claim is retarted in which case they will have no overpayment to repay.

DomRavioli

Completely off topic, but Link, nor Zelda, nor the King of Red Lions, Medli, Midna or even Ganondorf himself could have messed up that badly.

Apologies for those who don't get the reference.

FBaby

I have to say I fail to imagine a couple going through the stress of dealing with one overpayment making the same mistakes for the four subsequent years. I can understand the confusion of having to renew and follow the process once, but surely once you are told what you did wrong and what not to do again, you don't just put your hand in the sand and assume that all will be well in the future.

I assume the example is hypothetical to try to make a point?

lukieboy96

FBaby wrote: »

I have to say I fell to imagine a couple going through the stress of dealing with one overpayment making the same mistakes for the four subsequent years. I can understand the confusion of having to renew and follow the process once, but surely once you are told what you did wrong and what not to do again, you don't just put your hand in the sand and assume that all will be well in the future.

I assume the example is hypothetical to try to make a point?

I must admit that I find it strange that you have made a mistake that many times! Four times of not knowing about renewables? It is in the news so much!

meer53

Missed 4 renewal letters ?

Nope, don't believe it.

The first time they didn't renew they would have been told why their benefit was stopped. To miss it another 3 times is sheer stupidity. They're having you on.

lukieboy96

meer53 wrote: »

Missed 4 renewal letters ?

Nope, don't believe it.

The first time they didn't renew they would have been told why their benefit was stopped. To miss it another 3 times is sheer stupidity. They're having you on.

Must say I agree, once maybe, four time stupidity. It is on the news so much about renewing.

cattermole

Do they still send huge envelopes with leaflets in duplicate as well ?! One to each partner?! Or has that stopped now?

I always thought that was such a waste of money.

Icequeen99

You can appeal the decision on the new claim.

You cannot appeal the decision in relation to the non-renewals. You only have an appeal right if there has been a decision, if no renewal is done there is no claim made and thus there can be no entitlement without a claim (under tax credits legislation). It also means there is no appeal right as no decision has been made, HMRC simply stop provisional payments (which they have a power to do).

It is too late to do anything about those overpayments now, unless they were given wrong advice by HMRC (for example as others have said they phoned within 30 days of the statement of account).

You can negotiate a time to pay or have a suspension put in place if they are in financial hardship.

IQ

JustTryingToHelp

davehughes182 wrote: »

If a claimant does not renew their claim then they are required to pay back everything they have received from 6th April that year as an overpayment unless their claim is retarted in which case they will have no overpayment to repay.

Now when you say "restarted" do you mean renewed or getting approved on a new claim? because Link and Zelda thought it was the latter and that's partly why they're in such hot water right now.

blondebubbles wrote: »

- it is difficult to tell without knowing all the facts but I would doubt one week of invoices would be sufficient proof that the claimant works 30 hours per week on a regular basis
- is the child born yet? They will be entitled to child tax credits whether or not they get working tax. They also now only need to work 24 hours if there is a child on the claim (this can either be one person working 24 hours or one working 16 hours and the other working at least 8)
- my suggestion would be to apply again and if awarded, appeal for it to be backdated to the date they received the original claim

The new claim they are currently having a problem with (made on october 2013) was for when Zelda started taking maternity leave. She did not send in the invoices from before she took maternity leave and so was instructed by HMRC to give a weeks worth of invoices prior to maternity leave. I don't know if this is enough, but it's just what they asked of her.

I was told on the phone by HMRC that the hours for that week were not enough but that's only because they didn't look at the other set of invoices that were sent.

The child is born. Thanks for your advice.

DomRavioli wrote: »

Completely off topic, but Link, nor Zelda, nor the King of Red Lions, Medli, Midna or even Ganondorf himself could have messed up that badly.

Yes. If only this Zelda had the Triforce of wisdom I wouldn't be here asking for help.

FBaby wrote: »

I have to say I fail to imagine a couple going through the stress of dealing with one overpayment making the same mistakes for the four subsequent years. I can understand the confusion of having to renew and follow the process once, but surely once you are told what you did wrong and what not to do again, you don't just put your hand in the sand and assume that all will be well in the future.

I assume the example is hypothetical to try to make a point?

My initial post is not hypothetical. This is real.

From what they have told me I think the first accountant they took this problem to is mostly to blame. The accountant told them this problem can be sorted out, accountant takes their fee and then proceeds to make a new claim for the couple. The couple are now under the impression that they just need to make a new claim and the money HMRC are trying to get back will be cancelled out.

It wasn't until a few days ago I figured out how the system works and dispelled this misconception for them.

As for how did they miss sending so many renewals I am not sure on that point and neither are the couple because it happened so long ago and they aren't even sure if they ever received the renewals.

I do know they actually did receive their renewal for 2013 but (this part I didn't include in my initial post because I didn't think it was relevant) they took their problems to a different accountant who just put all their tax credit paperwork in a file and didn't send off their renewal. So what did he actually do? He hole punched some papers and put them in a file and told the couple it was sorted.

meer53 wrote: »

Missed 4 renewal letters ?

Nope, don't believe it.

The first time they didn't renew they would have been told why their benefit was stopped. To miss it another 3 times is sheer stupidity. They're having you on.

The missed renewals is something I have personally confirmed with HMRC. I can only confirm it wasn't their fault they missed the 2013 renewal (explained in my response to FBaby above)

There is also something else I have purposely withheld that could explain why they didn't send the renewals. The couple in question are Bulgarian nationals that arrived in 2005. I withheld this information because I did not wish for anybody's prejudices to discourage them for aiding me in this. Its become apparent to me now I can't hide this and give a full explanation. I will amend this detail in my initial post.

Because their English reading/writing is on a basic level they were able to fill in the claim forms, but when it came to the various other letters it becomes more of a jumble for them.

So back to the first renewal they didn't send. Their tax credit gets stopped. They get the letter asking them to contact HMRC due to a late annual declaration but don't understand it, all they know is that is says "your tax credits have been stopped". They take the issue to an accountant. Accountant just fills in a new application, tells them the issue with HMRC asking for the money back is now resolved. The couple's mindset is now "if my new application gets approved then everything is sorted" at no point did they understand how important returning that renewal pack is nor did they understand the over-payment is still lingering in the background.

Then every time their tax credit gets stopped they have suspicions that the UK government are discriminating against them for their nationality.

I've explained to them this isn't likely to be the case because its just a bunch of office administrators who are told to work to a set standard, where any official discrimination would likely get leaked to the public. This is just something I told them recently, so for all the times when their tax credits were stopped they were thinking "I'm being discriminated against" which gives possible reason for why they may not have trusted the HMRC letters sent to them.

They also have an incorrect understanding of the appeals process. They think that if they appeal then they have to wait 5-6 months for everything to get sorted out and they cannot make a new application for tax credits while the appeal is taking place. So they never bothered making an appeal.

Icequeen99 wrote: »

You cannot appeal the decision in relation to the non-renewals. You only have an appeal right if there has been a decision, if no renewal is done there is no claim made and thus there can be no entitlement without a claim (under tax credits legislation). It also means there is no appeal right as no decision has been made, HMRC simply stop provisional payments (which they have a power to do).

See, I was told that I could appeal against the decision for rejecting the dispute by someone at HMRC. So are you saying that I can't actually do that, or that I can do it but it won't amount to anything?

blondebubbles wrote: »

If a renewal is not completed by the required deadline, the claimants are given 30 days (on occasion has been 60 days) to restore the claim. A letter is sent to this effect. Why did they not reply?

I am pretty sure they told me why but I cannot remember. I'm trying to writing most of this from memory and there is only so much I can remember. I will update when I speak to them again.