Tax Credit Debt

cheeky-peach

Hi all,

My husband had a letter from HMRC asking him to pay his tax credit debt of around £750. The statement of liabilities shows the debts are from the period ending July 2011 and is for an overpayment of working tax credit and child tax credit. 

This came as a shock to him as it is out of the blue from 9 years ago. Why are they only contacting him now, 9 years later? His bank records only go back 7 years anyway. Any ideas why and how this came about after such a long period of time has passed? 

Thanks

calcotti

HMRC are chasing historic debt. Unfortunately, as you indicate, this is hugely disadvantageous to the claimants who will often have no relevant paperwork relating to that time period. There should have been some notification that an overpayment had occurred at the time.

poppy12345

They would have notfied him at some point in the past and he would have received a tax credits award notice and the overpayment would have been on there. Was this from a previous relationship as you say it was in his name?

cheeky-peach

Yes it was from a previous relationship. His ex got in contact to say she had received similar letter. The overpayment is dated the day she moved out after relationship breakdown. He isn't aware of receiving any other correspondence in the past and the date on the letter back in 2011 is the last time he made a claim for WTC or any other benefit. 

cheeky-peach

He is going to give them a call tomorrow anyway; I assume that both he and his ex will have to pay the amount on their individual letters and its not a shared debt as such? Is it something they can adjust your tax code for and take throughout the year or do they demand a lump sum?

Thanks for help.

calcotti

With a Tax Credit debt the outstanding amount is a joint and several liability which means that each party can be held liable for the whole amount. Normally HMRC will split the debt into two so one point you will want to clarify is whether the £750 (approx) has already split the overall debt into two.

When they split the claim ended and I suspect what may have happened is that HMRC would have needed more information in order to finalise the claim for that year but that information may never have been provided in which case all of the tax credits paid in that tax year would have been treated as overpaid and become a debt due.

Dinnerly

cheeky-peach said:

He is going to give them a call tomorrow anyway; I assume that both he and his ex will have to pay the amount on their individual letters and its not a shared debt as such? Is it something they can adjust your tax code for and take throughout the year or do they demand a lump sum?

Thanks for help.

The debt will be split in half with it being a joint claim you would need to check if £750 is half the overpayment.  If you can't pay the full amount up front you can set up a direct debit to pay it in installments.  The tax code won't be altered however the debt can be passed to DWP for a detachment of earnings basically meaning DWP will contact your husbands employer to take deductions from his pay.  This however is a last resort the debt will first of all be passed to a debt collection agency if you don't come to an agreement with HMRC. 
Your husband would have been sent a finalised award notice and probably a notice to pay in the past however if he moved out of the household chances are the new address might not have been updated. 

Hevinlosty

Hi cheeky-peach - the same thing has happened to me for a similar amount and apparently relates to a claim nearly 15 years ago that l was completely unaware of.  It all seems a bit suspicious to me.  They could have deducted the overpayment from subsequent awards.  Why didn’t they?  I haven’t received tax credits for years and shredded the paperwork thinking it was all done and dusted so can’t check but pretty sure l never had any sort of notification about any overpayment so this has all come as a bit of a shock.  I wasted a whole morning on the phone and they say that a notification was sent in 2011 which l guess went to an old address.  They say the debt is recoverable and when l said l wanted to complain they gave me the web address of an online form to fill in but this doesn’t work because you have to submit it within 13 weeks of the award you are disputing.  Well this isn’t even within 13 years so computer says no!  This has to be the most chaotic and frustrating Government Department 😡

cheeky-peach

Hevinlosty said:

Hi cheeky-peach - the same thing has happened to me for a similar amount and apparently relates to a claim nearly 15 years ago that l was completely unaware of.  It all seems a bit suspicious to me.  They could have deducted the overpayment from subsequent awards.  Why didn’t they?  I haven’t received tax credits for years and shredded the paperwork thinking it was all done and dusted so can’t check but pretty sure l never had any sort of notification about any overpayment so this has all come as a bit of a shock.  I wasted a whole morning on the phone and they say that a notification was sent in 2011 which l guess went to an old address.  They say the debt is recoverable and when l said l wanted to complain they gave me the web address of an online form to fill in but this doesn’t work because you have to submit it within 13 weeks of the award you are disputing.  Well this isn’t even within 13 years so computer says no!  This has to be the most chaotic and frustrating Government Department 😡

Well, Hubby called them and they said for him to fill in an online dispute form but it only lets you select the past 3 tax years (or something close to that!) so that's a no go which is frustrating as this is what he was told to do by the advisor he spent over 45 minutes waiting to speak to. It means he will have to call back again. Apparently, he has 30 days from the date of the original letter to raise a dispute. Onwards we push...

Hevinlosty

This may help you in your fight DMBM595080 - Debt Management and Banking Manual - HMRC internal manual - GOV.UK (www.gov.uk)

Debts that are not tax

In England and Wales only, the Limitation Act 1980 provides that recovery action for debts should commence within six years from the debt becoming payable. But Section 37(2) of the Act excludes proceedings for recovery of tax or duty and interest on tax or duty thus there is no time limit for those debts.

Other debts that are not tax, for example

• contract settlements
• tax credit overpayments
• Child benefit overpayments
• National Insurance Contributions
• Statutory payment recoveries (Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay)
• overpaid Child Trust Fund contributions
• Student Loan repayments and
• National Minimum Wage Act penalties

are subject to the Limitation Act, and action must be taken within six years “from the date on which the cause of action accrued”. In this context an action is the lodging of a complaint in the magistrates’ court, the issue of a county court claim form or the levying of distraint. In this same context the date on which the cause of action accrued is the original due date of the liability.

If an action is not taken within the time limit, it could be defended successfully on the grounds of limitation.

[Deleted User]

Hevinlosty said:

This may help you in your fight DMBM595080 - Debt Management and Banking Manual - HMRC internal manual - GOV.UK (www.gov.uk)

Debts that are not tax

In England and Wales only, the Limitation Act 1980 provides that recovery action for debts should commence within six years from the debt becoming payable. But Section 37(2) of the Act excludes proceedings for recovery of tax or duty and interest on tax or duty thus there is no time limit for those debts.

Other debts that are not tax, for example

• contract settlements
• tax credit overpayments
• Child benefit overpayments
• National Insurance Contributions
• Statutory payment recoveries (Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay)
• overpaid Child Trust Fund contributions
• Student Loan repayments and
• National Minimum Wage Act penalties

are subject to the Limitation Act, and action must be taken within six years “from the date on which the cause of action accrued”. In this context an action is the lodging of a complaint in the magistrates’ court, the issue of a county court claim form or the levying of distraint. In this same context the date on which the cause of action accrued is the original due date of the liability.

If an action is not taken within the time limit, it could be defended successfully on the grounds of limitation.

 Great except they'll just do direct deductions from wages or current claims