Urgent help with 6k tax credit demand

SnowWhiterThanWhite

Hi,

Please see post #28 for update


I have Power of Attorney for my brother who has some mental health issues (caused by alcohol abuse)

He was in a long term relationship and had 2 children. My brother does not have a clue when he comes to finances and has always just left it to his partner to sort out.(and now me)

His partner submitted a joint claim for tax credits several years ago, I am unaware of the amounts. All monies went into his partners sole bank account.

When the relationship finally broke down in Feb 2014, she moved out and as far as I know, continued to claim tax credits.

Unfortunately, my brother is in so much debt, and was living in complete squalor until I managed to get social services involved who did their best to sort out his living conditions.

It was only early part of 2015 that it came to light that there was an awful lot of old debt being chased. As my brother doesn't open his mail or answer the door, nothing was being done about all the letters piling up.

Social Services have sent all his unopened mail to me and I am slowly contacting all parties to try and get debt repayment plans in place.

However, I am really struggling with the demand for over 6K tax credit over-payment.

I have tried to call them and got absolutely nowhere so, in the end, I wrote explaining my brothers current situation and have received a reply today basically saying that he received this 'overpayment' for 2014-15 as he didn't tell them that his partner left him over a year ago. Problem is, my brother knows nothing about the claim for tax credits and certainly never saw any of the money (Obviously, it was being used to cloth/feed his family when they still all lived together)

HMRC are saying that normally, any overpayment would be reclaimed via tax credits but, he doesn't claim any benefits (other than PIP) so the overpayment cannot be reclaimed?

I'm pretty sure that his ex-partner continued to claim tax credits and I have asked why HMRC can't reclaim through her benefit but, HMRC say they can't do this because the overpayment relates to a joint claim and can only be repaid via a joint claim but obviously this has all stopped.

My brother has already been left with 3 years worth of council tax debt which I am trying to sort out payment of, but I just don't understand how to resolve this?

Surely, HMRC need to contact the ex, and arrange reclaim? I have tried to get further info from the ex but, she is being cagey about the whole thing and when I asked what she was doing about the overpayment letters she said she hadn't received any!

I just don't know what to do from here. Any words of advice would be appreciated.

Thanks

marliepanda

It's a joint claim, therefore he is liable. It doesn't matter who made the actual claim or received the money, he is party to it.

'Luckily' with joint claims they hold each partner liable for half, so they will only ask him for 3k (this is not the legal stance, but how tax credits choose to deal with it. Legally they could ask him for the full 6k)

Therefore you need to arrange a repayment plan for the 3k

SnowWhiterThanWhite

I understand joint liability etc. but what I don't understand is why the overpayment cannot just be reclaimed from the new sole claim in ex partners name? Otherwise, she has made 2 claims for same year, one in joint names and one in sole name?

marliepanda

SnowWhiterThanWhite wrote: »

I understand joint liability etc. but what I don't understand is why the overpayment cannot just be reclaimed from the new sole claim in ex partners name? Otherwise, she has made 2 claims for same year, one in joint names and one in sole name?

Again, thats how it works, single claims cannot be reclaimed from joint and vice versa. As they are jointly liable, recovering from a single claim from a joint overpayment would unfairly penalise the new single claimant. Similarly using a joint award to repay a single overpayment unfairly penalises the new partner on the joint claim.

However, that would make no difference to your brother. He would still owe the money. The ex does not have to tell you anything. Her half is her business. Nothing to do with you or your brother.

Is he paying maintenance?

When did you get power of attorney?

SnowWhiterThanWhite

marliepanda wrote: »

Again, thats how it works, single claims cannot be reclaimed from joint and vice versa. As they are jointly liable, recovering from a single claim from a joint overpayment would unfairly penalise the new single claimant. Similarly using a joint award to repay a single overpayment unfairly penalises the new partner on the joint claim.

However, that would make no difference to your brother. He would still owe the money. The ex does not have to tell you anything. Her half is her business. Nothing to do with you or your brother.

Is he paying maintenance?

When did you get power of attorney?

At the end of 2014

marliepanda

SnowWhiterThanWhite wrote: »

At the end of 2014

Is he paying maintenance for the children?

I am assuming he also lived in the house with his ex and children for the three years the council tax debt arose (how it got to three years worth I have no idea, CTax is hot on that stuff) thats also his problem. You can't say he was 'left' with it. It was his job to pay it as well.

SnowWhiterThanWhite

marliepanda wrote: »

Is he paying maintenance for the children?

I am assuming he also lived in the house with his ex and children for the three years the council tax debt arose (how it got to three years worth I have no idea, CTax is hot on that stuff) thats also his problem. You can't say he was 'left' with it. It was his job to pay it as well.

Yeah I know. The whole situation is just horrible, He had a breakdown around 5 years ago and everything went downhill. He lost all interest in anything. He was self employed at that time and basically just gave up working. His mortgage wasn't paid for 6 months and the first I knew of it was when his GF phoned me in a panic as he was due in court the following day for repossession hearing. My M&D had to bail him out.
C Tax was another one, he just stopped paying (he didn't have any money) and they went to court without him (not sure how that works)? Again, the C Tax was joint but I have arranged for him to repay whole lot.
The tax credits were used for food and immediate bills/clothing etc.
Please don't get me wrong, I am absolutely disgusted with him, and he has caused a lot of ill feeling between my family but, I don't want to see him out on the street, in prison or worse.
I have cobbled together an income and expenditure list and there simply isn't any money left after payment for mortgage, c tax arrears, debt repayments. I have also recently discovered a further 15K debt with lloyds which I'm trying to get to the bottom of.
Any idea what will happen next if he cannot make any repayments to this?

marliepanda

SnowWhiterThanWhite wrote: »

Yeah I know. The whole situation is just horrible, He had a breakdown around 5 years ago and everything went downhill. He lost all interest in anything. He was self employed at that time and basically just gave up working. His mortgage wasn't paid for 6 months and the first I knew of it was when his GF phoned me in a panic as he was due in court the following day for repossession hearing. My M&D had to bail him out.
C Tax was another one, he just stopped paying (he didn't have any money) and they went to court without him (not sure how that works)? Again, the C Tax was joint but I have arranged for him to repay whole lot.
The tax credits were used for food and immediate bills/clothing etc.
Please don't get me wrong, I am absolutely disgusted with him, and he has caused a lot of ill feeling between my family but, I don't want to see him out on the street, in prison or worse.
I have cobbled together an income and expenditure list and there simply isn't any money left after payment for mortgage, c tax arrears, debt repayments. I have also recently discovered a further 15K debt with lloyds which I'm trying to get to the bottom of.
Any idea what will happen next if he cannot make any repayments to this?

If he can't pay his mortgage, is there any equity in the house for him to sell, pay debt off, and leave enough to move into rented accommodation?

If not, sounds like bankruptcy could be the way forward (not massively sure how that works with council tax debts though, they're a funny one)

I'd suggest posting on the Debt Free Wannabe board regarding this, as this is more a debt issue than a benefits one it seems.

SnowWhiterThanWhite

Thanks. I have already suggesting selling the property - it is in quite a bad way, rotten floorboards, hole in bathroom floor, damp everywhere, a lean to conservatory falling down.
There would be a small amount of equity but not enough to repay all debt and then how could he afford rent? The only benefit he gets is PIP and that only came about because his social worker mentioned it and I applied on his behalf. He won't claim anything else. I have my own family to worry about as well as working full time and looking after elderly parent and in-laws
I don't know what else I can do, He won't consider selling, he's not interested in helping himself.
Plus, no-one would buy his flat in its current state :sad:

marliepanda

Well I'm not sure what to suggest. With no income and huge outgoing a to repay debt, something has to give.

If he doesn't choose to do something, his creditors will take it into their own hands.

SnowWhiterThanWhite

marliepanda wrote: »

Well I'm not sure what to suggest. With no income and huge outgoing a to repay debt, something has to give.

If he doesn't choose to do something, his creditors will take it into their own hands.

I know. I try and explain this to him but he doesn't care, it's a very difficult situation