How to stop Working Tax Credits.

Chen21

I have a relative whom I have been helping with their HMRC Working Tax Credit issues. This person was receiving Working Tax Credits, but I knew from conversations with this person that they were due to receive a promotion, which would mean that as they are already near the limit on their WTC entitlement, if the WTC were not stopped they would end up owing money to HMRC. 

We wrote to the TCO (sent recorded delivery) and explained that the WTC needed stopping immediately so as this person does not end up in debt to the HMRC. This letter was sent 2 years ago.

Even though we kept sending reminders again by recorded delivery, they took more than 6 months to reply.

The HMRC TCO Customer Processing Officer says that it is not possible to stop the WTC for an individual.

I have checked the Tax Credits Act 2002 legislation and cannot find any information that says the HMRC is not allowed to stop WTC.

In fact there appears to be a section 14 (3) that states:-

The Board’s power to decide the rate at which to award a tax credit includes power to decide to award it at a nil rate.   

We have appealed their decision but they are still saying that their is no option to stop WTC payments on request. 

The consequence of this process and decision is that the individual now is in debt to the HMRC TCO which has been referred to a debt collector.

Could you let me know if the Tax Credit Office or the HMRC has the power to stop a persons WTC on request.

I have tried posing this question to various bodies and advisors but nobody appears to be able to help.

marcia_

Chen21 said:

I have a relative whom I have been helping with their HMRC Working Tax Credit issues. This person was receiving Working Tax Credits, but I knew from conversations with this person that they were due to receive a promotion, which would mean that as they are already near the limit on their WTC entitlement, if the WTC were not stopped they would end up owing money to HMRC. 

We wrote to the TCO (sent recorded delivery) and explained that the WTC needed stopping immediately so as this person does not end up in debt to the HMRC. This letter was sent 2 years ago.

Even though we kept sending reminders again by recorded delivery, they took more than 6 months to reply.

The HMRC TCO Customer Processing Officer says that it is not possible to stop the WTC for an individual.

I have checked the Tax Credits Act 2002 legislation and cannot find any information that says the HMRC is not allowed to stop WTC.

In fact there appears to be a section 14 (3) that states:-

The Board’s power to decide the rate at which to award a tax credit includes power to decide to award it at a nil rate.   

We have appealed their decision but they are still saying that their is no option to stop WTC payments on request. 

The consequence of this process and decision is that the individual now is in debt to the HMRC TCO which has been referred to a debt collector.

Could you let me know if the Tax Credit Office or the HMRC has the power to stop a persons WTC on request.

I have tried posing this question to various bodies and advisors but nobody appears to be able to help.

 Why did they not phone the TCO to report a change of circumstances? 

 Why did they not put the tax credit money to one side knowing it would have to be repaid 

Chen21

I have found from experience that it is better to get everything in writing, phone call conversations get misinterpreted.
This person assumed that the money had been stopped because it is only a small amount each month included with the Child Tax Credit. You also have to bear in mind not everyone understands WTC or even their own finances or have the time to sort these type of problems out, hence the reason I got involved eventually. It is a lot more involved as this has been going on for many years and they do not understand how it all works. I have been drafting letters for them and they just sign them as they do not understand the regulations or the processes that the HMRC TCO work under. There have also been a lot of mistakes made by the TCO over the years, even when everything has been put in writing. I now need an answer to my original question.

Yamor

There is no facility to stop "payments" of WTC on request.
You can withdraw from tax credits altogether (i.e., to end "entitlement"), but that would only take effect from the start of the next tax year. However, doing that would also mean you get no child tax credit.
I suppose there could be a potential work-around, by reporting to HMRC that you no longer work the requisite number of hours.

However, regardless of the above, the correct procedure to have followed would have been to provide HMRC with estimated income figures, and they would have adjusted the award accordingly. This could have been done in writing, on the phone, or online.

Chen21

Because the estimated figures would have been for two years ahead, there was no way of knowing within a reasonable amount what the gross annual salary would be. So the best option so that the individual does not get into debt would be for the WTC to be stopped or someone in authority at the HMRC as stated in my original post to change the WTC to a 'Nil' rate. Can this be done? 

Yamor

HMRC will only award WTC at a nil rate if that is what is calculated based on income figures you provide.
You cannot simply request a nil award any more than you can request an award at any other rate.
If you provide an estimated income figure for the current tax year which is sufficiently high, then you would get a nil award, as in that case the calculation would come out with nil entitlement.

WTC is only ever dependant on, and paid for, the current tax year, so you would only ever have to provide an estimated income figure for the current tax year.

Chen21

Thank you for explaining that. I wish HMRC TCO had told us that in the many communications that have been going on for years. I was very apprehensive about providing estimated figures that would be to high in case that left us open to deliberately providing misleading information. You are the first one to explain this and I am extremely grateful for your comment. I suppose my only and last question is why did the TCO Customer Processing Officer not explain this years ago as it would have saved this person getting into debt. The other issue that the HMRC TCO does not seem to care about is, if we had been told this years ago it would also save the Treasury and taxpayers money. Obviously some might think, well it is only a small amount in the grand scheme of things, but I am sure this person is not the only one who has had problems with the Tax Credit system, it seems a bit like the Horizon Scandal Mk 2. 
Thank you again for your help, you have been very patient, helpful and informative. 

Newcad

Of course there is one sure fire way to immediately stop being paid Tax Credits - claim UC.

That will stop both WTC and CTC being paid, as well as any other Income Releted benefits that you currently claim (Housing Benefit, IR ESA,  etc).
However if you do choose to claim UC yourself without getting a Migration Notice first then you won't be entitled to any Transitional Protection.
So it's vitally important make sure that you would qualify for UC, and that you would not be worse off on standard UC alone, without any Transitional Protection.

If you do claim/qualify for UC then any debt owing to Tax Credits will be taken at so much a month from any UC you are entitled to.