Pursued by HMRC for overpaid tax credits from 2014

Gr8st33t

I have received a threatening letter from HMRC, according to which I have been overpaid tax credits and now owe a total of almost £900. This has come as quite a shock as I have not been contacted by HMRC regarding tax credit for years. Apparently, the debt has been returned to them by the debt collection company that was actually dealing with the debt. I am not sure what to do at this point as I am not in a financial position to make any payments at present. I have also been reading about statute-barred debts in other threads, but as this is from 2014 it falls short of the six-year period to be classed as statute-barred. I am considering whether it would be wise to continue ignoring this until the six years have elapsed, or whether it would be better to contact HMRC and come to an arrangement. I currently have one CCJ which has only started earlier this year, so regardless of this HMRC debt it looks like I will have to wait six years anyway for my credit rating to improve, so am I right in saying that acknowledging one more debt (and therefore restarting its six year count from this year instead of 2014) won't make any difference to my already dire credit rating?
Finally, given this threating letter, what is the worst thing that can happen?
I have read a whole host of horrific things online such as: direct recovery of debt (DRB), where HMRC directly takes money from my account and distraint.
I am wondering if any of these are applicable to me given that:
1) I do not own any property (I live in a housing association)
2) I have no cars
3) I don't have much money in my account (balance less than £850)
4) I really don't have any assets

What do you think would be the wisest course of action?
Thank you.

IAmWales

Ignoring your debts is a bad idea, not least because HMRC will apply an earnings attachment so do not need to take you to court. Contact them, ask for evidence of the debt, and then make an arrangement to repay what you can afford.

This is not going to go away. Give them a call now.

Gr8st33t

I am self-employed. Would an attachment of earnings order be applicable in my case? My understanding is this is normally applicable to employers for to deduct from their employees' earnings.

Angry_kittens

Benefits over-payments do become statute barred, but HMRC have more powers to recover it - including withholding future benefits payments (partially) they do not need to go to court for this and it can be done after the debt would by statute barred.

As suggested, this debt is not going anywhere, I would advise sorting it now by making contact.

IAmWales

Gr8st33t wrote: »

I am self-employed. Would an attachment of earnings order be applicable in my case? My understanding is this is normally applicable to employers for to deduct from their employees' earnings.

In that case they'll either pursue you through the courts, incurring you additional costs, or they'll deduct it from your next benefit claim, or they'll deduct it from your pension, whenever that may be.

Can you see that this is not going to go away? If you don't pay now they'll make deductions from benefits at a time when you need them the most.

Have you called them yet? You could have got through by now.

National_Debtline

Hi Gr8st33t


For what it is worth, this Tax Credit overpayment won't be having any bearing on your credit file one way or another. As others have suggested, there are recovery methods that HMRC may be able to use without needing to take court action, so even if they did, for example, claw the money back from a future benefit entitlement, this action would not have any impact on your creditworthiness.


For now, you should proceed on the assumption that the debt is valid and recoverable (albeit not directly from self-employed income), and seek advice on how you best deal with it as part of any wider debts you may owe.


Dennis
@natdebtline

enthusiasticsaver

The wisest course of action is to contact them and advise them of your situation and see what they suggest.

kram

I can only echo what others have said but I would get in contact with them, make them aware of your current situation & come to some kind of arrangement.

Then it's one less thing to worry about.

I hope you get things sorted going forward.

Max_and_sasha

Hi ,

I would phone them and set up a direct debit with them with what you can afford that's what I did I was overpaid by nearly 3000, when I phoned them up i found them very helpful told them I could not afford to pay it all at once and agreed to pay them £50 per month until it's finished i have not heard from them since other than an annual statement, as i have never missed a payment

Hope this helps

Max

BettyBones

I've been in a similar position with overpaid tax credits. I rang them up straight away and they agreed to let me repay the monies owed via monthly direct debit over 3 years, which they said was the maximum length of time they could give me to repay (although i did owe them substantially more than £900). I would just ring them and try to come to some kind of arrangement.

fatbelly

Gr8st33t wrote: »

I have received a threatening letter from HMRC, according to which I have been overpaid tax credits and now owe a total of almost £900. ... I am not sure what to do at this point as I am not in a financial position to make any payments at present. I have also been reading about statute-barred debts in other threads, but as this is from 2014 it falls short of the six-year period to be classed as statute-barred. I am considering whether it would be wise to continue ignoring this until the six years have elapsed, or whether it would be better to contact HMRC and come to an arrangement. I currently have one CCJ which has only started earlier this year, so regardless of this HMRC debt it looks like I will have to wait six years anyway for my credit rating to improve, so am I right in saying that acknowledging one more debt (and therefore restarting its six year count from this year instead of 2014) won't make any difference to my already dire credit rating?
Finally, given this threating letter, what is the worst thing that can happen?
I have read a whole host of horrific things online such as: direct recovery of debt (DRB), where HMRC directly takes money from my account and distraint.
I am wondering if any of these are applicable to me given that:
1) I do not own any property (I live in a housing association)
2) I have no cars
3) I don't have much money in my account (balance less than £850)
4) I really don't have any assets

In theory they could obtain a ccj but they would have no way of enforcing it

Gr8st33t wrote: »

I am self-employed. Would an attachment of earnings order be applicable in my case? My understanding is this is normally applicable to employers for to deduct from their employees' earnings.

No, A direct earnings attachment would not be possible

Do you agree that you owe the money? Have you ever challenged this? Have you asked for it to be remitted?

There's some info here

http://www.advicenow.org.uk/guides/survival-guide-dealing-tax-credit-overpayments

http://revenuebenefits.org.uk/tax-credits/guidance/how-to-deal-with-hmrc/dealing-with-debt/