Tax Credits Debt Letter - Please Help

Icequeen99

SmokieJoe wrote: »

As far as I'm aware, not to cases over 6 years old. There has been a flurry of activity due to the Limitations Act being raised recently by claimants, and QSC were seeking clarification on the guidance. Adding the debt of those cases to a tax code has never been mentioned as an option, nor has it been considered in recent cases I've dealt with where the debt is more than 6 years old. If you have personal experience that differs, that's fine, but until I see evidence that it is being rolled out in these cases as national guidance I would be hesitant to accept it is the standard position.

I have seen 3 cases since January of 03/04 debts being recovered from tax codes. So I do think it is happening, there is no published guidance that suggests they are applying the Limitation Act to it. I can't see why they would when it is very clear. It's similar to direct earning attachment powers where no court is needed, the Limitation Act doesn't apply because it can be done without court (obviously they don't do it for tax credits).

I am not saying the Limitation Act doesn't apply to tax credits, obviously it does and claimants should use it if applicable, what I am saying is that it is limited to court action.

Edited to add: Section 38(1) of the Limitation Act states that 'action' (which is what is limited to 6 years) is any proceedings in a court of law. So any recovery of money that isn't in court is outside of the Act. I am struggling to see your argument for saying HMRC are prohibited from coding out a debt or recovering from future benefit if it is older than 6 years. What would prohibit them?

IQ

SmokieJoe

Icequeen99 wrote: »

I have seen 3 cases since January of 03/04 debts being recovered from tax codes. So I do think it is happening, there is no published guidance that suggests they are applying the Limitation Act to it. I can't see why they would when it is very clear. It's similar to direct earning attachment powers where no court is needed, the Limitation Act doesn't apply because it can be done without court (obviously they don't do it for tax credits).

I am not saying the Limitation Act doesn't apply to tax credits, obviously it does and claimants should use it if applicable, what I am saying is that it is limited to court action.

Edited to add: Section 38(1) of the Limitation Act states that 'action' (which is what is limited to 6 years) is any proceedings in a court of law. So any recovery of money that isn't in court is outside of the Act. I am struggling to see your argument for saying HMRC are prohibited from coding out a debt or recovering from future benefit if it is older than 6 years. What would prohibit them?

IQ

If it were that simple to subvert the Limitations Act I suspect it would be done in every single case where a tax code could be altered. Without knowing the details of the cases where it has happened I can't comment. I will raise it with my colleagues and see if there is a consensus that altering tax codes can and indeed is being utilised in this manner now. It will be interesting to know, as it would be something I would make people aware of as a possible course of action to expect when dealing with these cases. Thanks for sharing that.

Icequeen99

I think I found the answer here....there was an amendment to the LImitation Act 1980 by the Welfare Reform Act in 2012. Section 108 of the WRA 2012 amends the Limitation Act to put the situation beyond doubt that for DWP benefits and tax credits 'action' only refers to court action and not any other methods of recovery.

http://www.legislation.gov.uk/ukpga/2012/5/section/108/enacted

I think that clarifies things.

IQ