Tax credits, notice to pay letter from HMRC

Wealden_broker

Last week out of the blue, I received a letter from HMRC relating to an overpayment of tax credits dating back to 2004, yes 21 years ago. I am at a loss as to what to do. I don't have any records dating back that far. My son was 6 years old in 2004, he is now 27.
Can they force me to pay what is a four figure sum when I have nothing to prove otherwise.

fatbelly

Are you in receipt of a benefit now, that they can deduct from?

Wealden_broker

The only benefits I have ever received in 46 years of working was the CTC/WTC tax credits in early 2000 (I forget which was which but it related to support for families with children). I became self employed in 1999, so in the early years with my partner at home bringing up our son, the house hold income was low enough for us to be eligible. 

fatbelly

Good. That gives you time to challenge/dispute this. I find these cases are best dealt with by benefits specialists. There are a few on this board

Wealden_broker

Thanks! I plan to appeal via the links provided online. Being new to the forum, how to I get in touch with these benefit specialists?

Hoenir

Wealden_broker said:

Last week out of the blue, I received a letter from HMRC relating to an overpayment of tax credits dating back to 2004, yes 21 years ago. I am at a loss as to what to do. I don't have any records dating back that far. My son was 6 years old in 2004, he is now 27.
Can they force me to pay what is a four figure sum when I have nothing to prove otherwise.

What form does the letter take. Have they explained their reasons behind their assessment. Going back such a long period of time suggests something has triggered an investigation. This isn't as the result of just arbitary checking. HMRC have formidiable powers once they get their teeth into something historic. 

Wealden_broker

Me and my partner both received a 1 page letter headed "Notice to pay". It said that they have stopped our tax credits and checked for any overpayments. It referred me to a table at the bottom of the letter which provided the amount I owed for the period 05/04/2004. I don't have any paperwork but it was a very, very long time ago when we last claimed these benefits.

Baldytyke88

In theory, in England and Wales, the Limitation Act 1980 applies to tax credit debts. There is some confusion in this area because the Act does NOT apply to tax debts. This is confirmed in the HMRC DM manual. The Act provides that recovery action for debts should commence within six years from the debt becoming payable. In most cases, this prevents HMRC from taking County Court action but generally doesn’t stop recovery from ongoing benefit awards or from the debt transferring to DWP for recovery (either via universal credit or separately).

The law on whether this six-year rule applies is complex and advice must be obtained from a legal and/or debt specialist.

Call HMRC on 0345 302 1429

https://revenuebenefits.org.uk/tax-credits/guidance/how-to-deal-with-hmrc/dealing-with-debt/#Recovery of old tax credit debts

Depending on the circumstances, after 21 years they may write this off.

Wealden_broker

Noted thanks!

peteuk

Baldytyke88 said:

In theory, in England and Wales, the Limitation Act 1980 applies to tax credit debts. There is some confusion in this area because the Act does NOT apply to tax debts. This is confirmed in the HMRC DM manual. The Act provides that recovery action for debts should commence within six years from the debt becoming payable. In most cases, this prevents HMRC from taking County Court action but generally doesn’t stop recovery from ongoing benefit awards or from the debt transferring to DWP for recovery (either via universal credit or separately).

The law on whether this six-year rule applies is complex and advice must be obtained from a legal and/or debt specialist.

Call HMRC on 0345 302 1429

https://revenuebenefits.org.uk/tax-credits/guidance/how-to-deal-with-hmrc/dealing-with-debt/#Recovery of old tax credit debts

Depending on the circumstances, after 21 years they may write this off.

They wont - although they can not take you to court as it is time barred, they can either remove it from your benefits or wage.

You are probably out of time to complain about this as they would have advised you of the overpayment at the end of the financial year it was calculated in. You could argue that it’s the first you knew about it, however this may not be accepted. As they will argue that any incorrect information on a TC claim is the claimants fault as they are meant to read and understand the details and advise of any change in circumstance. 

If you phone them they will advise you further about why/when it occurred and you can set up a payment plan to pay it off.   The other thing to check is was it a joint claim, because they have a habit of splitting the amount 50/50 and sending it to each claimant.   Regardless of whos account it was sent to. 

Newcad

A number of people migrating from Tax Credits to Universal Credit got similar letters from DWPs 'Debt Management' about old (sometimes very old) Tax Credit overpayments that HMRC had not been chasing but DWP will chase.

Most migrating from Tax Credits to UC are finding just how lenient the TC system was compared to other Income Related benefits, so lenient that most people didn't even regard TCs as income related benefits even though they clearly were.

As tax Credits end entirely on 5th April 2025 I'm not at all surprised to see that those who are no longer on Tax Credits (so won't be migrating to UC) and who may have been overpaid in the past are also being looked at again to see if they can now be persuaded to pay something back.
I don't think that it can be any more than persuasion at this time.

I suspect that we are going to see more of this in the next few months as the Tax Credits system is wound up.

I'd suggest that the best thing to do is to stall, don't agree to anything and definitely not to repay anything.
The DWP/HMRC are tryng it on, see what happens next.