Tax credit overpayment from 2006?

I have just opened a letter from HMRC demanding repayment of tax credits I was apparently overpaid in 2006. I have no bank records from then, I shredded all correspondence in 2018/19 when I moved house thinking it was all sorted.

Is it right that HMRC can suddenly demand repayment 18 years later?
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  • MattMattMattUK
    MattMattMattUK Posts: 8,600 Forumite
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    Floss said:
    I have just opened a letter from HMRC demanding repayment of tax credits I was apparently overpaid in 2006. I have no bank records from then, I shredded all correspondence in 2018/19 when I moved house thinking it was all sorted.

    Is it right that HMRC can suddenly demand repayment 18 years later?
    The Limitation Act does not apply to tax credits so there is no time limit on the recovery of overpayment, HMRC can and indeed must reclaim them when they become aware of an overpayment.
  • Alice_Holt
    Alice_Holt Posts: 5,946 Forumite
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    Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.
  • Floss
    Floss Posts: 8,230 Forumite
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    I don't have the time or headspace for trawling through many pages, please can you link to the precise section on that website which says they can claim back 18 year old debt?
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  • MattMattMattUK
    MattMattMattUK Posts: 8,600 Forumite
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    edited 9 March at 4:46PM
    Floss said:
    I don't have the time or headspace for trawling through many pages, please can you link to the precise section on that website which says they can claim back 18 year old debt?
    There will not be a "precise section" that states that they can claim an eighteen year old debt, it is a combination of different legislation. The first being the legislation surrounding Tax Credits, various debt legislation and then the Limitation Act which specifically excludes Tax Credits,  as well as various other (but not all) debts owed to parts of HM Government from the time limits on normal debt recovery time limits. 
    Floss said:
    marcia_ said:
     😂😂🤣 lazy that 
    Not particularly if you look at the link posted!

    Anyway, I just tried to raise a dispute online on form TC846 and it only goes back to 2018/19, so I will have to find time to speak to them on Monday while at work.
    People on here are more than willing to help, but I'm general being difficult with those trying to help you is not going to get a good response. Just because you did not like the answer to your enquiry does not mean it is wrong.

    HMRC have the power to recover this overpayment and they will take action if you do not respond positively to their letter. You can ask them to show their workings, but the reality is unless you can prove it is not owed they will take recovery action, age of the debt is irrelevant. You have three choices, ask them for their workings and if they are wrong dispute them, they are incredibly unlikely to be wrong. Engage with them and either pay the amount due or agree a payment plan. Ignore them, face enforcement action and see additional penalties and interest added to what you already owe.

    Just to be clear, in no way is this being from 2006 going to get you out of repaying, that is entirely irrelevant and fixating on it will benefit no one.
  • Floss
    Floss Posts: 8,230 Forumite
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    There will not be a "precise section" that states that they can claim an eighteen year old debt, it is a combination of different legislation. The first being the legislation surrounding Tax Credits, various debt legislation and then the Limitation Act which specifically excludes Tax Credits,  as well as various other (but not all) debts owed to parts of HM Government from the time limits on normal debt recovery time limits. 
    Floss said:
    marcia_ said:
     😂😂🤣 lazy that 
    Not particularly if you look at the link posted!

    Anyway, I just tried to raise a dispute online on form TC846 and it only goes back to 2018/19, so I will have to find time to speak to them on Monday while at work.
    People on here are more than willing to help, but I'm general being difficult with those trying to help you is not going to get a good response. Just because you did not like the answer to your enquiry does not mean it is wrong.
    Its not that I didn't like the abrupt answer, more that I've already spent 2 hours trying to find an answer.

    Maybe I'm too used to folk posting links to relevant areas of a website on DFW. 
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  • Alice_Holt
    Alice_Holt Posts: 5,946 Forumite
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    Floss said:
    There will not be a "precise section" that states that they can claim an eighteen year old debt, it is a combination of different legislation. The first being the legislation surrounding Tax Credits, various debt legislation and then the Limitation Act which specifically excludes Tax Credits,  as well as various other (but not all) debts owed to parts of HM Government from the time limits on normal debt recovery time limits. 
    Floss said:
    marcia_ said:
     😂😂🤣 lazy that 
    Not particularly if you look at the link posted!

    Anyway, I just tried to raise a dispute online on form TC846 and it only goes back to 2018/19, so I will have to find time to speak to them on Monday while at work.
    People on here are more than willing to help, but I'm general being difficult with those trying to help you is not going to get a good response. Just because you did not like the answer to your enquiry does not mean it is wrong.
    Its not that I didn't like the abrupt answer, more that I've already spent 2 hours trying to find an answer.

    Maybe I'm too used to folk posting links to relevant areas of a website on DFW. 

    You were given the very clear answer that it is collectable.


    I posted the website link so that you could begin to understand how to deal with your TC overpayment.


    Re raising a dispute using a TC846  -  "From October 2013, HMRC have made it clear that claimants can no longer dispute old overpayments where they have not disputed within 3 months of their final award notice. In practice, this means that those with debts being recovered directly for 2014/15 and earlier years are unlikely to have the right to dispute."
    Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.
  • MattMattMattUK
    MattMattMattUK Posts: 8,600 Forumite
    First Anniversary First Post Name Dropper
    Floss said:
    There will not be a "precise section" that states that they can claim an eighteen year old debt, it is a combination of different legislation. The first being the legislation surrounding Tax Credits, various debt legislation and then the Limitation Act which specifically excludes Tax Credits,  as well as various other (but not all) debts owed to parts of HM Government from the time limits on normal debt recovery time limits. 
    Floss said:
    marcia_ said:
     😂😂🤣 lazy that 
    Not particularly if you look at the link posted!

    Anyway, I just tried to raise a dispute online on form TC846 and it only goes back to 2018/19, so I will have to find time to speak to them on Monday while at work.
    People on here are more than willing to help, but I'm general being difficult with those trying to help you is not going to get a good response. Just because you did not like the answer to your enquiry does not mean it is wrong.
    Its not that I didn't like the abrupt answer, more that I've already spent 2 hours trying to find an answer.

    Maybe I'm too used to folk posting links to relevant areas of a website on DFW. 
    Statute barring applies to consumer debts, as well as other debts, thr Limitation Act was introduced to clarify and implement that (various other bit were under a mess of case law), but as with much of out legislation it is an interaction of multiple pieces of legislation that give HMRC the right to recover overpaid Tax Credits, not one nice and simple bit as it is with consumer debts.

    A quick Google search came up with the below, where an HMRC advisor sums it up pretty simply, there are hundreds of other similar summaries, solicitor articles saying the same thing. Many of them will not link to specific paragraphs of specific legislation because most people would not read or understand the legislation, as well as the potential implications of case law.

    https://community.hmrc.gov.uk/customerforums/taxcredits/0e3fff50-1161-ee11-a81c-6045bd0c7b9d

    Section 28 of the Tax Credits Act 2002 tells us if the amount we have paid claimants for a tax year exceeds the amount of which they were entitled, it is known as an overpayment and we will make a decision on whether the overpayment should be repaid. How caseworkers reach a decision to recover overpayments is set out in COP26.

    Where we have made a decision that the overpayment must be repaid, Section 29 of the Act says we must give notice to the claimants regarding the amount to be repaid, and how this is to be recovered. When a customer falls out of tax credits and their debt moved to Debt Management, s29(3) of the TCA2002 allows the debt to be treated as a taxes debt and recovered on this basis. 

    Timescales for the recovery of some debts in England and Wales are dealt with by the Limitation Act (LA). The LA states that generally the time limit for the commencement of collecting a debt is six years from the date the debt became payable. This rule does not apply to tax credits and the pursuit of the debt. 
  • peteuk
    peteuk Posts: 1,316 Forumite
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    Should I throw some experience in here…

    We have an over payment from 2010 - please note the we because it was a joint claim although it was paid into a single account. 

    The start of the overpayment recovery was from the following years claim.  However we moved abroad and had no claim.  I recieved the end of year letter that stated we had no overpayment.  So I was happy and did nothing. 

    We move back to the UK and within a month of OH starting work we get an outstanding overpayment letter, I challenge it and told I’m out of time, but try anyway,  Which I do and then its radio silence.  We move abroad and come back to the UK in 2019.  2020 I recieve an outstanding overpayment letter. 

    So I admit defeat and set up a payment agreement, 6 months later my OH receives a letter saying that they would take it from her wage… so I contacted them.  Seems as it was a joint account they had split the outstanding by two and wanting to recover each half from each of us.  

    BOTTOM LINE - ALTHOUGH THEY CANT TAKE LEGAL ACTION YOU ARE LIABLE FOR ANY OVERPAYMENT!  REGARDLESS OF THE TIME FRAME,  ANY TIME FRAME TO COMPLAIN IS WELL OVER.  THEY CAN PULL IT FROM YOUR WAGE WITHOUT GOING TO A COURT (HENCE THE LINE THEY CANT TAKE LEGAL ACTION…

    Best thing to do is contact them on Monday and get where and why the overpayment occured and how much they have already recovered.   And then set up a payment plan.  Im paying £25 a month on a £5K payment…
    Proud to have dealt with our debts
    Starting debt 2005 £65.7K.
    Current debt ZERO.
    DEBT FREE
  • Icequeen1
    Icequeen1 Posts: 441 Forumite
    Name Dropper First Post First Anniversary
    edited 10 March at 8:56AM
    Floss said:
    I have just opened a letter from HMRC demanding repayment of tax credits I was apparently overpaid in 2006. I have no bank records from then, I shredded all correspondence in 2018/19 when I moved house thinking it was all sorted.

    Is it right that HMRC can suddenly demand repayment 18 years later?
    The Limitation Act does not apply to tax credits so there is no time limit on the recovery of overpayment, HMRC can and indeed must reclaim them when they become aware of an overpayment.
    That is not correct - the Limitation Act does not apply to tax but it does apply to tax credits. The post on the HMRC community forum is wrong on the Limitation Act point. It is correct about Section 28 and 29 which are the Sections of the Tax Credits Act that allow HMRC to recover overpayments.  

    See HMRC's debt management manual which confirms that tax credit debts are covered under the limitation act https://www.gov.uk/hmrc-internal-manuals/debt-management-and-banking/dmbm595080 
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