Tax Credits Overpayment/Compliance Help

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Goldilocks_x
Goldilocks_x Posts: 6 Forumite
edited 18 July 2018 at 8:13AM in Benefits & tax credits
Hi - first time poster here :j I hope I’m posting in the right place but apologies if not!

I was wondering if somebody could help please. From March 2017-March 2018, I was on maternity leave and my earnings (including the £100pw reduction) was £5839, my partners approximately £27200. When I submitted this on the tax credits renewal, it flagged up as drastically different to my RTI (because of the maternity leave which they wouldn't accept despite being able to see my youngest DOB) and we therefore had a compliance check for every aspect of the claim including the £108pw childcare costs.

Fast forward and I realised that childcare vouchers shouldnt be included so I called them and changed it to £53pw childcare (108-55 vouchers my partner paid).

I went back to work and put my youngest in nursery at a whopping rate of £118pw for my baby and £79 for my eldest (who gets funding) and from 01 June, we stopped the childcare vouchers. I had called TC each time my bills changed (ie when we had 2 children in and then when childcare vouchers stopped).

The compliance team found (after 7/8 weeks and me chasing them!) that my childcare costs should have actually been £27pw because I had actually paid some vouchers at the very beginning of my mat leave and they have said that based on that and my household earnings, we arent eligible for anything 2017/18 year so we owe them the £170 we got awarded last year. When I put it all in the calculator online however, it says we should have been eligible for £72 which cuts the overpayment in half? Its also worth noting that childcare costs fluctuated drastically in 2017/18 due to funding changes so I've requested bank statements to see if I can see how much we paid over to see if that £27 is accurate.

They are also refusing to make any changes to my 2018/19 year so CC costs are still £27 despite no vouchers/2 kids in nursery now. I am contesting this and nursery are providing me with a letter stating costs and when vouchers ended etc. I’m concerned that my eldest stops getting funding in August so it will increase and then starts school in September and therefore childcare costs will reduce again and currently we are having nothing but trouble when costs have remained relatively static.

Can anybody work out what the overpayment actually is approximately? I cant wrap my head around the calculator being so wrong. Also, I have no idea how that overpayment will be worked out.

Its absolutely baffling me tbh and I have no idea what to do other than take them at their word, despite having little faith in them following all the probilens we’ve had. 2017/18 was the first year we have ever asked for/received any help from the Government and it’s been an absolute nightmare and causing too much stress... especially given that currently I have £100pm spare from my wage after childcare and they think I pay £27 :rotfl:

2017/18 earnings - 5839 + 27200
Working week - 37 + 41
Childcare costs - 2 children, pay costs for 1, £27

2018/19 earnings - 14000 + 27500
Working week - 19 + 41
Childcare - 2 children, pay for 2, £27 during April, £145 during May, £197 from June

Payments received 2017/18 - approximately £170 every 4 weeks
Payments received 2018/19 - £270 in April, £90 every 4 weeks, payments stopped end of June.

I still havent received any letters from HMRC despite my claim being stopped at the end of June, however I have put in a complaint about that so any request for overpayment has been put to a halt until its all sorted. 2017/18 through the mandatory reconsideration process (whilst I check bank statements/provide evidence of what their online calculator says) and 2018/19 as another compliance check to prove my costs (although still no letter about this either).

Sorry for the rambling but Im at the end of my tether! My OH keeps telling me to get the MP involved but I don’t know whether thats a little drastic?

Thanks in advance!
Goldilocks

Comments

  • Darksparkle
    Darksparkle Posts: 5,465 Forumite
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    The 2016/17 income will also be needed to calculate the 2017/18 claim as you need to factor in income changes and the income disregards.

    Also when was your youngest born? Did you have 2 children for the wholenof 2017/18 tax year?
  • Goldilocks_x
    Goldilocks_x Posts: 6 Forumite
    edited 18 July 2018 at 11:44AM
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    Hi Darksparkle,

    Thanks for your reply.

    My youngest was born on 01/04/17.

    My earnings for 2016/17 were £21204, my partners would have been about £27000. Im not sure what my childcare bill for the year would have been maybe £90pw as we didn’t get the 30h funding at that point and my eldest was in full time? We didnt claim or get awarded anything before April 2017.
  • Darksparkle
    Darksparkle Posts: 5,465 Forumite
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    I agree with HMRC then that there is no entitlement to tax credits in 2017/18.

    When your income decreases from one year to the next the first £2,500 of the decrease is disregarded. So your 2017/18 claim would have been based on an income of £35,539 not the £33,039 actually earned.

    When you completed the online calculator, did you factor in the 2016/17 income or the disregard?
  • Goldilocks_x
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    I didnt put it in (because I wasnt aware of it) and I amnot sure the calculator asks or mentions it anywhere tbh? Would that decrease have still been disregarded even though it!!!8217;s dropped because of maternity leave?

    Do you know how any overpayment would be recovered from this year? Obviously we aren!!!8217;t getting anything at the moment so I!!!8217;m a little baffled by the entire thing!
  • Darksparkle
    Darksparkle Posts: 5,465 Forumite
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    Which calculator did you use?

    The disregard applies to all income increases/decreases regardless of why.

    If you are entitled to tax credits this year then the overpayment will be recovered from that. If no entitlement you'll be asked to pay back directly.

    So the main thing to now resolve is the correct award for this year. What reason did they give for refusing to update it?
  • Goldilocks_x
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    The one on the tax credits website.

    They didnt really give a reason other than because !!!8220;its to make sure there isnt another overpayment!!!8221; although I amended my figures to incorporate the childcare vouchers which is where the original issue has occurred. They are simply refusing to change the £27 until I prove both children are in nursery and what the weekly costs are (although they!!!8217;ve accepted my change of earnings and working hours so not sure what they think Im doing with my youngest when their cost only includes my eldest!)

    I have received a letter today about the reason they!!!8217;ve changed last years to £27 (because of childcare vouchers which i was aware of) but nothing to do with this year or evidence they need etc.
  • Goldilocks_x
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    I received my letter from nursery and between April and August, my weekly childcare bill averages out at £175.17 and it should then drop to £140 per week from September (132 for youngest and 8 for eldest).

    Is anybody able to work out approximately what we are entitled to this year and what that would reduce to with the £1800 overpayment please?

    The £140 should remain relatively static now (other than for summer holidays when my eldest won!!!8217;t be in breakfast clubs) until my youngest received funding in September 2020.
  • Darksparkle
    Darksparkle Posts: 5,465 Forumite
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    You said in the OP the overpayment was £170?

    Tax credits this year would be around £3100-£3200. The overpayment would be deducted from that. Rates are here - https://www.gov.uk/tax-credits-overpayments/repay-your-tax-credits
  • Goldilocks_x
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    Hi Darksparkle

    Sorry - my OP wasnt very clear at all. The overpayment they said on the phone was about £1800 based on our payments of £170 per month.

    I assume it would work out as like £3100-£1800=£1300 so we should have received approximately £100 per month?

    Thanks for all your help! Its really appreciated
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