HMRC's explanation, which took over three months to write:
Quote:
Thank you for your letter of 8 May 2008 asking for an explanation of your tax credits overpayment for tax year 2005-2006. I am sorry for the delay in replying.
I have considered the information you have provided and checked our records to determine the reason for your overpayment. I have found that the overpayment arose because of an increase in your annual income.
A tax credits award runs in line with the tax year, from 6 April through to 5 April of the following year. Your award is normally based on your annual income from the previous tax year. After 5 April each year, we send you a renewal pack asking you to check the information we hold about you and to tell us your actual annual income for the tax year that has just ended.
Whilst we wait for you to send us this information, we make provisional payments from 6 April. This is to prevent a break in your payments.
On 5 October 2005 you told us that your correct annual income was £17,780.00. This reduced your entitlement to £0.00 which was shown on your award notice dated 10 October 2005.
In total, you received £51.14 paid direct to you and £794.49 paid to you via your employer on your award for 2005-2006. This means that you were overpaid by £845.63, which is the difference between the amount we paid you and the amount you were entitled to receive.
For us to write off an overpayment, you must be able to show that you have met all of your responsibilities as set out in our Code of Practice 26. To meet these responsibilities you must have:- provided us with accurate and up to date information when you made or renewed your claim;
- checked that all the personal details on your award notices were correct and told us straight away if any personal details were recorded incorrectly;
- told us promptly about any changes of circumstances throughout the year; and
- checked that the payments you were receiving matched what we told you we would pay.
Having considered all of the relevant facts about how your overpayment arose, I do not think that you met all of these responsibilities. This is because your income increased when you came to finalise your award. For this reason, I cannot write off the overpayment and you will have to pay the money back.
|
It is my firm opinion that this has arisen mostly because of the ridiculous way in which WTC is calculated. My initial claim was made in March 2005, when I had been earning a "proper" wage for 10 months; however as we all know the claim form asks for details of earnings in the
previous tax year, in this case 2003-04 during which I was temping and earning half as much.
I had no reason to believe that they wanted to know my current earnings when I applied. They asked about the previous year on their form, I don't understand how they work it out so I can only answer the question they ask, right?
Their review form arrived towards the end of May 2005. I admit I was slack in returning it (in September) - I don't know why but if I understood their system properly I would have realised the urgency in returning it. I answered the questions honestly and in early October I received two letters simultaneously.
The first stated that I had been paid too much for 2004-05 and that I owed £112.13 ie. 100% of the WTC for that period. I found record of a cheque I wrote in November 2005 for this amount, but I cannot remember any more about this.
The second was regarding the WTC I received from April 2005, which contains the following:
Quote:
- Amount you owe us that will be collected from future years £845.63
- Less amount we have already paid you for this period £688.97
- Amount to be paid £156.66
|
They then went on to make two further payments in October and November 2005 to bring the amount I had received up to the amount they say I owe them. WTF?
My whole claim was effectively a waste of everybody's time, simply because they didn't ask the most relevant question at the outset, ie. "what are you earning
now?", then their paperwork refers to "income for tax credit purposes". And because I didn't (and still don't) understand all this, I didn't return the review form quick enough - presumably because cash was tight and the form said it had to be returned by the end of September 2005 - so now they want hundreds of pounds back and I feel I haven't a leg to stand on.
Can anyone offer me any advice?
HMRC want 2005 Working Tax Credit back 
