Help with old debt for a friend

osaddict

Hello everyone,

A friend of mine has been told they have to pay a sizable sum (£18k) because some kind of child tax credit was claimed in error in 2007 and 2008. The tax office have only just realised this and want to send a bailiff to collect if the total isn't paid.

My friend phoned the bailiff and they said as part of the debt would be over 10 years old it might be halved.

Where do they stand here? Seems crappie to me that the tax office find it only nearly 10 years later. I'm asking to see if I can help as my friend has lots of other responsibilities which makes researching this a bit too time consuming.

Thanks for the help.

Guest101

Time consuming? For £18k I'd make the time....


In any case the DWP can take money directly from wages, so really it's a moot point.


What he/she needs to do is ask them to explain the outstanding balance. - presumably they had a change of circumstances in 2077-08?

osaddict

I thought someone would pick up on that, it's complicated but let's just say it involves practically round the clock care for someone seriously ill amongst other things, hence why I'm trying to see what I can find out.

Originally that'd what they said that they would collect from wages, so not sure why they bailiff is necessary.

At any rate is there no recourse if it's over 10 years ago?

As regards circumstances, I believe one member of a couple claimed for something she was not entitled to in error.

National_Debtline

Hi Osaddict,


There are quite a few things to be aware of in a situation like this. First of all, there is a piece of legislation called the Limitations Act that does state, if there has been a 6 year block of time since the debt fell due and there has been no payment, no written acknowledgement and no court action started in that time, the debt may be too old to be chased in the county court and is known as statute barred. There are 3 potential issues with this rule and tax credit overpayments though.


Firstly, when did the debt fall due? If they have only just become aware of it, the 6 years may have only just started. Secondly, even if the limitations act does apply, that only prevents them going through the county court. HMRC can take money directly from benefits/ wages without the need of a court order, use bailiffs without a court order, or adjust your tax code, so they don't need the county court to recover the money. And thirdly, if the debt is deemed to be fraudulent, the limitations act doesn't apply at all. I only mention this because of the amount.


I am not familiar with any '10 year rule' so don't understand what they are referring to with regard to halving the debt. If these are genuine bailiffs (and not a debt collector) then do not let them in, keep the property locked and hide any vehicles. They can only come inside peacefully. However, if they have already been inside and your friend has signed something with them, they will need to contact one of the free debt charities urgently. Good luck,


Laura
@natdebtline

osaddict

Thanks for the reply. Nobody has been inside nor has he signed anything, to my knowledge.

I believe they were made aware of this at the start of the year, then were told they didn't need to pay, and ow told they did need to pay. (Hazy I know, I'm going on second hand knowledge from someone else).

So, if you messed up benefits surely the next tax year would be when the 'debt is due' so the onus is on the tax office to highlight it? If it's been over 6 years since that then does that change things?

Thanks for you help.

National_Debtline

Hello again,


The 6 year clock under the limitations act starts from what is known as the date of cause of action. There is no legal definition of this but it is generally deemed to be at the first point where the creditor could take steps to recover the debt. So, the HMRC couldn't take recovery action until they determined the money was owed and this is not necessarily the next tax year.


If all the information provided on the application for benefit was accurate and the overpayment is due to an error made by the HMRC, you can ask them to write it off on this basis. They are not required to do this but you can complain and escalate the matter if needs be.


If the information provided was inaccurate then the HMRC are very unlikely to consider a write off request. They will then consider whether they believe the inaccurate information was given intentionally or not. You then have to consider what I mentioned in my last post about when the limitations act applies and when it doesn't and other enforcement options when a this type of debt is more than 6 years old. Good luck,


Laura
@natdebtline

osaddict

Thanks Laura, I don't know whether they'd be in the their error or hmrc error situation to be honest, I would suspect the latter.

Is National Debt line a number my friend could call if he has more information at his fingertips? I'm wondering if this could help him further.

Thanks again

osaddict

Just a reply so I can subscribe to the thread.

National_Debtline

Hello,


Yes your friend is very welcome to call us, or any of the free debt charities for more in depth advice.


Laura
@natdebtline