overpayments, repayments, wombling free

HomeDIYGuy

Hi, I'm new here. I've read plenty of forums, here and elsewhere about how tax credits (should) work, the rules, regs and problems therein. I also appreciate that for gripes I should direct my thoughts to the discussion boards. Here I have a series of questions.
My new partner has had here share of issues with them and I'd like to understand her options.
I understand that eligibility is based on the previous year's total income, which is fair enough - do we really trust everyone to declare their predicted earnings up front? That would no doubt lead to lots of overpayments, but for a lot of people changes of circumstances cannot be disputed. Sorry, not meant as an opinion.
In 13/14 she earned approx. £28k
In 14/15 she went on maternity. Her earnings therefore significantly dropped. To statutory maternity. Her husband earned < £15k. Towards the end of that year she returned to full time employment.
By my reckoning she was entitled to tax credits.
Last year she received a letter regarding her overpayment. They effectively wanted the whole lot back.
Not only that, but since she and her husband are now she and her ex (he left unceremoniously), HMRC pursued them BOTH for the same amount EACH. I don't understand that. Even on MSE website it says that they should pay half each.
With him leaving, she had to go part-time to look after their 2 year old daughter, losing income, at that time receiving no new tax credit and being lumbered with a large bill.
Of course she contacted them, but (comments redacted) nothing. They said if she repaid it all then she could appeal. She couldn't repay it all so didn't appeal. This is farcical (excuse the slip).
Surely she should have been entitled to tax credits whilst on maternity, regardless of her earnings the year before or year after? Surely they should only have to repay the "overpayment" once between them, not each? Opinions aside, that seems nonsense.
She had to take an IVA, because of her ex leaving, her going part time, not being able to manage everything and then the tax credit bill to cap it off. She can't afford to challenge anything, if there's a cost involved, which makes it a vicious circle.
I still can't understand how the system works. If it is to top up low incomes, as hers was, why did they pursue her for a repayment and why are they double-paying it?
She seems resigned to accepting it, and being in debt forever, but now there are concerns that any she received this year, 16/17 (since she went part-time in July), will be declared an overpayment because she earned over £25k in 15/16.
Surely they should compare total income each year and against tax credit (retrospectively) and not earnings from other years? I understand basing awards on earlier years (its the way tax codes work, and general budgets in business), but you always reconcile at the end of the year. It's how income tax works. Shouldn't tax credits work the same?
I dread the day I might ever have to claim any. I'll just bank it, not spend it and keep it in case they ever want it back, but surely that defeats the object of paying it out?
Is there anything we can do about the "overpayment", the double-repayment, the eligibility etc?
many many thanks in advance to anyone who replies with helpful information and to all the others who took the time to read my essay.

Darksparkle

Tax credits is based on the previous year's income unless the current year income increases/decreases by a certain amount. This amount of disregarded in the calculation. This is currently £2,500 for both increases and decreases.

Future years aren't taken into account. If the overpayment is from 2014/15 the only years relevant are 2013/14 and 2014/15.

In the tax year 2014/15 this disregard was £2,500 for decreases and £5,000 for increases.

So if for example in 2013/14 the household income is £40,000 and in 2014/15 the household income is £20,000. Tax credits will be calculated on £22,500 (£20,000 earned plus £2,500 disregard for income decreases).

Tax credits must inform both parties of the TOTAL overpayment. It is then their practice to have each party repay 50% (although legally they can have one person pay more/all they choose not to use this). If she arranges a time to pay they will set this up for her 50% and continue to contact the ex partner for the remaining 50%. Or they could take her 50% from future tax credit awards.

There is no way for us to know why the overpayment occurred based on the information supplied. It could be that they under estimated their income, they didn't complete he annual review form, didn't report a change on time etc. Or it could be some sort of error on their side.

She can ask them to confirm the reason for the overpayment however it is likely too late to take any action on this as the timescale for a dispute is 3 months after the decision was made. If an appeal was more appropriate this should have been done within 30 days although they do accept late appeals up to 13 months. It's likely this timescale has also passed.