Notice to Pay overpaid working tax credit - Have HMRC discretion to cancel?

ChrisB51

I have always declared everything to HMRC. I started my state pension in January 2013 . I was and am still working.
I had a letter in September this year (2014) with a notice to pay nearly £600 which it says is an overpayment of WTC for 2013-14.
In June 2013 I had a letter showing the TAX CREDIT AWARD for April 2013 - 2014 (£1893). and therefore received about £36 per week. In July my wages and hours worked increased and I telephoned HMRC immediately They confirmed they would stop the WTC. (which I expected with the increase in wages- I hadn't expected a claim for the WTC already paid to me.

A friend has looked at the letters and thinks they had made an error in their original calculation for the year in that they had correctly assessed my projected earnings for the year but had put a projected "other income" figure which must be my state pension as £1060 pounds when it was going to be £5700.

I certainly did not understand this and as stated have always been totally straight and punctual in my dealings with HMRC. If this is the reason, is there any discretion for HMRC to cancel the amount claimed or give me time as it was surely their mistake in not calculating using the correct figure for State Pension if this is the reason?

shammyjack

If you can prove that you informed them in time and they continued to pay you the wrong amount then there is legislation that stops them from claiming it back.

I do not have it available at the moment as I deleted the files that related to my late Mother from my computer . I will have a look in my hard copies and post back later .

shammyjack

Here you go . Have a look and see if you think this applies to you .

http://www.lawcentreni.org/EoR/benefits-and-tax-credits/tax-credits/recovery-of-overpayments.html

The legislation has changed somewhat since I had dealings with them but it appears that in some circumstances they should wave the overpayment

shammyjack

Thanks for the updated info ! Mine may be a little out of date but I would be wary of relying totally on a DWP leaflet, they tend to word things in their favour with a bit of poetic licence on the actual law .

IMHO the OP should contact an independent benefits advisor or Citizens Advice .

ChrisB51

blondebubbles wrote: »

With regards to the income, what year are you referring to?

It is the figure used on the Award Notice received in June 2013 and I assume based on my income in previous tax year (which had been the same for a couple of years). If I hadn't started working the extra hours in July the wages (income) would have remained constant. What had changed was my state pension which started in January 2013. The State Pension is (I now think) what is shown as "other income" on the Award Letter received in June. Just to clarify the award letter shows "Income" and then "Other Income".

ChrisB51

blondebubbles wrote: »

Okay so if you started receiving pension in Jan 2013 that was in the 2012/13 tax year - how much pension did you receive between Jan 13 and the end of the tax year? Was it the £1060 figure?


Did you call them at any point between April 2013 and April 2014 to tell them the amount would be increased (as you would then have it for the full year and not just 3 months)

Yes it was £1060, 3 months of that tax year. In June 2013 I received the award letter and my hours increased in July 2013 (when I immediately telephoned). At that stage I had been receiving my State Pension for about 6 months (3 months of the previous tax year and 3 months of that tax year)

Icequeen99

shammyjack wrote: »

If you can prove that you informed them in time and they continued to pay you the wrong amount then there is legislation that stops them from claiming it back.

I do not have it available at the moment as I deleted the files that related to my late Mother from my computer . I will have a look in my hard copies and post back later .

That isn't quite correct.

The legislation allows HMRC to recover any overpayment no matter how it was caused (even their error).

However as the legislation gives them a discretion, they have a COP 26 policy (that BB quoted) that sets out when they will write off an overpayment. However, it is just a policy and not legislation.

Problem most people face is that even if HMRC admit the error, if the person didn't spot the error on their next award notice it won't be written off. So HMRC's mistake is only part of it.

IQ

ChrisB51

blondebubbles wrote: »

Okay so can you tell me what your total 2012/13 income was and total 2013/14 income?

On the call in July 2013 you made a change to you working hours and income. On this call did you also tell them the amount your pension would be for the full tax year 2013/14?

You would have been sent a new awards notice after that call. What income did that show?

Unfortunately the way tax credits are designed, overpayments can occur due to increases in income because it based on the full tax year, not weekly or monthly as you are paid. So even if you ended your claim in July it's still the full tax year income thats used to calculate your claim.

For 2012/13 it was £5300 +£1060 State Pension
For 2013/14 it was (about) £9900 + £5700 State Pension (I haven't got the exact figures at home with me!)

In the call to them in July, I would not have thought to mentioned the State Pension, I was only phoning to advise the change that I had just been offered and accepted at work!

I did receive the new revised Awards Letter after the phone call which I read and saw the "0" - which I had expected (The End of my Claim)and then filed it. I didn't really read it as thoroughly as I should have (hindsight). It differs in showing the projected/full year State Pension as £5700 when the Award letter received in June had shown the £1060

My finances up to July "needed" the WTC but I am reading from your reply that I should have budgeted from July to repay the credits already paid to me (because of the annualized basis you explained). If I am understanding you correctly, does this mean there are no appeal reasons and if so can I ask for time to pay or adjustment of my tax code?

ChrisB51

Icequeen99 wrote: »

That isn't quite correct.

The legislation allows HMRC to recover any overpayment no matter how it was caused (even their error).

However as the legislation gives them a discretion, they have a COP 26 policy (that BB quoted) that sets out when they will write off an overpayment. However, it is just a policy and not legislation.

Problem most people face is that even if HMRC admit the error, if the person didn't spot the error on their next award notice it won't be written off. So HMRC's mistake is only part of it.

IQ

That does not look good for me. I just saw the "0". Please see my post 12 for fuller explanation and ... thanks!

ChrisB51

Thanks to all. It makes it much easier and less stressful to go forward with the knowledge you have given me. I am really grateful.