Submitting an R185 - please share your experiences. Working Tax Credits & Inheritance.

Franco_OK

My Mum and Dad both passed away in early 2019 and it took until August 2020 for the house to sell and the estate to be finalised by the family solicitors.  I've been self employed since 1987 and I'm now 6 months away from receiving my state pension.  

Partly because I've been struggling with my health for the past few months, I didn't submit my tax credits renewal with the quite the attention perhaps I should have done.  
Under "Other household income" I read "Trusts, settlements or estates" and being an honest sort of chap I typed in the money I inherited.  I've paid off what remained of my mortgage, put some money in my current account for me to live on and then put the rest in NS&I. 

On the 2nd of August I received two statements from HMRC, no accompanying letter, no explanation or clarity.  In simple terms my working tax credits have been stopped, I'm to repay £4700 and I'll lose approximately £1200 more over the next 6 months.  I've always understood that there is no upper limit to savings where tax credits are concerned, so it was a bit of a blow - slight understatement.  

I've spent all this week trying to research what has happened here.  I've spoken to 4 Tax Credits Helpline agents, also to various help bodies, Citizen's Advice etc.  The Tax Credit Helpline agents - the first two admitted they didn't understand the issue, another was plain rude - barking at me down the phone, "it's income!".  Finally on Friday I spoke to somebody who seemed to know their stuff.  At first he was adamant that what I'd inherited was "income", but then drilling down on the subject it seems that I'll have to submit an R185 to prove what proportion is "income", or rather what should be declared as income.  To ask for a "mandatory reconsideration".  My solicitor will give me the R185 tomorrow plus a covering letter, she was surprised the question was even being asked - apparently that part of my inheritance which can be classed as income is just 20p!

There are lots of thread on the forum concerning capital, savings, legacies and income.  Virtually all state unequivocally that inheritance should not affect tax credits, but threads which go on to discuss providing an R185 and the eventual outcome are harder to find.  I'd be very grateful if anybody could please share their experiences of making a similar appeal using an R185, asking for a "Mandatory Reconsideration".  

Alice_Holt

Just to say that there are time limits on submitting a MR -  so do it asap and make sure it is received by HMRC within a month of their letters.

Capital (including capital from inheritances) do not affect Tax Credits.  The TC helpline is incorrect, (but so was your tax credits renewal form). 
You need to clarify this asap with HMRC.  Include a copy your solicitors letter and R185 form with your MR.

In addition to the -
  - R185 form, and
  - the MR,
 
- do a complaints letter about the phone calls (again include the MR, R185 form).  Copy to your MP if HMRC prove unhelpful.

- And also dispute the overpayment demand (see link below).

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

https://revenuebenefits.org.uk/tax-credits/guidance/how-to-deal-with-hmrc/appeals/starting-an-appeal/

https://revenuebenefits.org.uk/tax-credits/guidance/how-to-deal-with-hmrc/disputes/

Keep all correspondence, and log phone calls.

The intention of all the above being to get this onto the desk of a HMRC employee who has the knowledge and discretion to correct your incorrect tax renewal, restart your claim, and withdraw the overpayment.     

You will need to persevere, as HMRC can be very difficult to deal with (hence the various methods suggested - MR, R185, overpayment dispute, complaint letter, and possible intervention from your MP) . Be very aware of time limits (for HMRC appeals and disputes). 

Franco_OK

Many thanks for your very helpful post Alice. 

Do you mean I should a send a separate complaint letter, also an additional letter to dispute the overpayment demand itself?

It looks as if my fears concerning this appeal are fully justified.  
I am aware of the time limit, another aspect to raise my stress levels! 

My family solicitor is not an expert on benefits - by her own admission.  However she has considerable experience in the field of wills, estates, savings etc. 

I have wondered if I might better going straight to a solicitor that would be able to deal with this swiftly and cleanly.  I'm not in great shape either physically mentally at present, I live on my own and I can foresee quite a struggle.  The limited contact I've had with Citizen's Advice gave me the impression they had little idea - maybe I was unlucky with the person I spoke to - it's possible. 

Icequeen1

It would be rare to find a solicitor who can deal with tax credits. 

The main thing is to just submit a MR. Your error was to declare it on the renewals form, so it has been taken into account as income. 

Disputing the overpayment is not the right thing to do - a dispute is where you accept the overpayment is correct but you think there is a reason why you should not have to pay it back. That doesn't apply here as it was your mistake initially. 

The appeal is about having that amount removed from the calculation of your award. So submit the MR with as much detail as possible. 

Franco_OK

Yes it was my mistake - and I've caused myself a whole pile of trouble. 

https://www.howellsllp.com/2021/04/12/will-my-inheritance-affect-my-benefits/

I'm not saying I'll follow this up, I'll try the mandatory reconsideration first.  So saying, if their advice was to be free. 

Franco_OK

Update.  I sent a completed R185 form and my request for a Mandatory Reconsideration on the 16th August. 

I haven't received any kind of response and I'm not sure what my next step should be.