Tax credits overpayment demand

zkat posted

Every chance, as well as a chance that you need not pay it back at all. The Revenue are on very dodgy ground in asking for repayment. They would have to prove that you deliberately defrauded them in the first place.

I have been in a similar position since 2005, although a smaller sum is involved. I have simply declined to pay anything "back". Instead I wrote to them saying that I was not aware of any overpayment and did not recognise their calaculations.

I wouldn't bother to ring; I tried it once and gave up waiting.

The entire tax credit system has been in utter chaos since it started, for the simple reason that credits for one tax year are assessed on income in the previous year. They forgot that many peoples' income varies significantly and unpredictably from one year to the next.

Don't know.

OK, so what's the current situation. Do they still need you to repay?

Presently they can only go back a few years as the Tax Credits scheme hasn't been running for that long, previously it was a Social Security benefit paid by the DWP / DSS.

zkat posted

Every year they send me a statement of what they think I owe them. I file it in my several-inches-thick folder of tax credit stuff, and forget about it.

I don`t think there is a time limit on collecting overpayments if the award is correct.

Assuming you are still eligible to Tax Credits based on your income, children etc they will just stop the calculated payment into your account. I have been in that situation with my Tax credit allowance slowly eating into the overpayment over the past years and now I owe 2k. The children have now left for uni so I phoned them back in July to report my change in circumstance and I am waiting to see what happens next.

Gio

You really need to contact them urgently.

It is not unlikely that this is their system getting it wrong.

How much were you paid in tax credits for that year? And did you believe you were entitled to tax credits?

very possibly. So long as you talk to them about it, and they can see that you are making genuine attempts, then they will often agree a different payment schedule.

6 years unless they suspect fraud is involved (on your part), when there is no limit.

They wouldn't have to prove deliberately fraud. They would have to prove no entitlement to the money.

Peter

Is it not the case that if they make a mistake in their judgement of whether there is entitlement, where the facts supplied by the claimant are correct (i.e. neither fraudulent nor erroneous), and if they subsequently discover that their judgement was wrong, then surely they can't claim any handout back, thus making the claimant a victim of *their* incompetence?

No they wouldn't.

All they would have to show is that you were not entitled to the money.

They only have to show *any* deliberate intent on your part if they want to impose penalties. Although even then, negligence may be enough.

No.

That is not the case.

They can't impose any *penalties* in that case, and usually won't try to impose interest. But they *will* claw the money back.

If you receive money that you were not entitled to you have to pay it back. If someone genuinely thought they were entitled to the money the court - if it got that far - wouldn't make any repayments that were too onerous. HMRC have cocked up many thousands of these cases and they know that if they have to take the claimants to court it would cost them more to track the monies received than the actual money being paid back! They have also realised their incompetence has caused a lot of stress to many people and they don't think it's fair to make the claimants replay the money. Despite this there is a difference between what is fair and what is legal entitlement. The money has to be paid back but at what rate?

Peter

Yes they would. These tax credits are benefits, not tax assessments.

Perhaps I should have phrased it thus: The revenue can *ask* for repayment, but they cannot enforce it.

Even if that were true, they haven't even bothered to do that in the OP's case (or mine).

Nonsense. No taxpayer has a duty of care to double-check the work of the HMRC. If a qualified HMRC staff member, fully trained in administering the tax credit system, cannot get it right, how can a 19-year old single mother from Doncaster?

It would be different if the claimant had deliberately lied to HMRC. But as I have explained, that's not what's happening. Instead, HMRC has made assessments for future benefits based on past income. Such a cretinously stupid system is *bound* to make wrong assessments on a completely routine basis. The people responsible are the government, and only the government. As indeed HMRC seems in practice to have accepted.

I don't know the details but this comes up fairly often on the legal newsgroup where too much salary has been paid by mistake.

I was under the impression that if you honestly believed the money to be yours and therefore spent it (I would think this is highly likely in tax credit errors cases) then you couldn't be made to repay it if it would seriously disadvantage you.

If you are receiving tax credits then it would appear to me that you are at the minimum income level and therefore any extra unexpected payment will disadvantage you. Additionally, you could argue that the error in the previous year has already disadvantaged you and you have already had to cut back because you had assumed that the previous assessment was correct and have therefore taken out subscriptions, loans, whatever, based on your belief of what minimum income level you would be getting.

If you discover you were entitled to benefits for the last three years but didn't claim them then the tax office assume that therefore you didn't need them and hence aren't entitled to the backdated payments. I don't actually see why the tax office should think the situation is different if it's the tax office that makes an error in your favour instead.

Tim.

A lot of what you say is correct but the money should be repayable but at a rate that takes into account the claimant's circumstances and whether the claimant was proven to know that they were not entitled to the money.

Peter

But isn't that now the case with the regular Tax Return? If you fill in all the boxes correctly and send it back early enough to get them to work it out, I thought I heard that you were still responsible for paying the correct amount in January, even if they work it out wrong.

I agree that it is ridiculous for a mere mortal to be able to do their work for them, and quicker, and more accurately. Are there advertised thresholds for TCs. ie if you are earning about £10k then you can expect arounf £x? I suspect not.

"Greg Rozelle" wrote

Are the "tax people" made up of "tax persons" ?

There was a big story on this a few months ago. HMRC had been found to be acting illegally (and against their *own* guidelines) in demanding overpayments due to their mistake be repaid.

Up to a quarter of a million families forced to repay their tax credits are in line for a refund due to an error by HM Revenue & Customs (HMRC).

HMRC broke the law by failing to write to claimants whom they suspected had been overpaid to tell them officially they were being investigated. The error affects overpayment cases going back to

2003-04.

Some 5.8 million overpayments have been made during this time; in some

5 per cent of cases, HMRC failed to write to inform claimants they were under investigation. Where this error occurred, any tax credit overpayment subsequently clawed back now has to be refunded.

"We made a mistake and have to hold our hands up and repay the money," an HMRC spokesman said.

As for the cost of the error, the HMRC dismissed claims carried in the media that it will have to repay up to £500m as "gross and distorted". Instead, it put the figure at close to £20m.

"We will be writing to all the families involved offering them a refund," the spokesman added.

This is the latest in a long line of embarrassing tax credit mistakes made by HMRC. The credits scheme, which pays money to six million British families, has been dogged by administrative error and fraud since its launch.

In July, the National Audit Office said that losses totalling up to £1bn a year due to fraud and error were "unacceptably high".

The online tax credit claims system has been closed since late 2005 following an attack by organised gangs of fraudsters.

report here well worth a look

Or