Thread: HMRC want 2005 Working Tax Credit back

Late last week I answered my mobile to a call from the "debt recovery" arm of HMRC; who claim I was overpaid over £800 on a WTC claim in 2005. They have been trying to inform me of this by writing to an address I moved out of over 2 years ago, and never tried calling me until now - I did them a favour by answering (damn it!)...

Firstly there is no way I can pay this, secondly I am not accepting the say-so of some guy on the phone so I have sent a SAR requesting everything relating to this claim. I have also checked the existing paperwork I could find, plus my pay slips from that year, and they are asking me to repay more than I received in the first place!!

As far as I remember the application form asks for details of your wages for the previous year - as I had just changed from thin-on-the-ground temping to a proper job, so any "change of circumstances" effectively happened before my application and if their form asks the wrong questions surely that isn't my fault?!? I hope that the SAR will confirm that I answered their questions correctly; I really don't need this right now that A&L have screwed me and are hiding behind the OFT case

Loz

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Thanks for that mooreda - it looks like I've been caught out in part by that £2500 / £25000 change. As I also suspect thousands have other people have been. What's with that change anyway, it's like admitting that somebody made a typo...?

I got a jiffy bag full of paper off HMRC.. hope to find some time to sit down later today and look through it. FWIW this is the only thing I've heard from them since I foolishly returned their call

HMRC's explanation, which took over three months to write:

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:

• 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?

bump

You're right in that the overpaymnet was not your fault and was caused by a flaw in the system. The bad news is they can legally recover all tax credits overpayments anyway.

If you are disputing the fact that an overpayment occured, then you can appeal this to an independent tribunal.

I think my best options are stated on their form TC846:

You must be able to show that
• we made a mistake or gave you incorrect advice and
• it was reasonable for you to think your payments were right.

Their "mistake" IMHO was asking me what my earnings for the previous year were, instead of current earnings. This led me to believe that the system was based on the previous year's earnings and that they did not want to know about current earnings - therefore it was "reasonable" for me to think my payments were right.

Thoughts anyone?
Loz

Well I never replied to their letter last summer, and all has been quiet on this front for the past 9 months... until I got a letter at the weekend. They want me to pay the "overpayment" in full by 13th June, which is impossible.

I think I need to convince them that there is no overpayment because it was reasonable for me to think my payments were right. If I can convince them of this, can I also request that they repay me the £112.13 for the previous tax year? Is the tenfold increase in the "income disregard" since then any use at all?

Has anyone out there succeeded in doing this?

Loz

I sent them a letter a couple of weeks ago, which if nothing else will hopefully postpone any action they have planned:

I dispute your claim that this money was overpaid, on the basis that I provided the information that HMRC specifically requested, and I did so in good faith. It was not clear to me exactly how HMRC calculated the payment I received, but I assumed (as any sensible person would), that the information collected in the application process would be crucial.

Let me elaborate. When I applied for Working Tax Credit in March 2005, the application form requested details of my earnings for 2003-2004 (ie. the previous tax year). During that period I was not employed full time and my earnings reflected those circumstances; I entered full time employment in April 2004 but I was not asked about this at any stage during my application. From the questions on the form it was entirely reasonable to assume that the calculation was based on the earnings from that tax year, not the (then) current one. When I received the award paperwork it referred to “annual income for tax credit purposes”, which again did not make me think that you wanted to know about my income for 2004-2005.

When the annual declaration form arrived in 2005 it did indeed ask for details of my earnings for 2004-2005. This was the first time this information had been requested of me. Since all the evidence to date had indicated that my award was based on a previous tax year, it was not clear that there was any urgency to return the form - in fact the form indicated that I had until 30th September 2005 to return it. Furthermore, section 3 of the form refers specifically to my award for 2004-2005.

With all this confusing information in mind, I consider that it was entirely reasonable for me to consider that the payments were correct. The fact that you are asking me to repay the entire award implies that the application process was flawed, a failing for which HMRC must be completely responsible. As a layman I provided the information requested, and it is not my fault if the wrong questions are asked or the award process is not explained to me clearly. I repeat my assertion that it was reasonable to believe that the payments were correct, and that there was no overpayment.

Additionally, since I have already repaid £112-13 because of erroneous HMRC procedures, I believe I am entitled to have this sum returned to me on the same basis, namely that there was no overpayment.

I was interested to learn that HMRC will now disregard income rises of up to £25000 and request that you consider this in my case, if you still believe that I was overpaid. I trust that you will act with discretion in this matter and I await your reply.

In the meantime I have received an annual review form (dated 2nd June), which is something I have not received nor expected to receive in the past 4 years. Why do I get one now I wonder? All it tells me is my award is zero and I still "owe" £845-63...

Sorry to hear of your problems, i received a call to day from them stating that i owe money from 2006 !

Extremely strange, this was from a previous relationship and ive got proof that the claim was ended correctly with no payments due to either party.

I expressed my concerns. told them i would vigoursly defend this overpayment, i also mentioned this website, the call then went crackly and ended, im not going to ring them, ill just wait and see !

Originally Posted by MakemBill

BBM

How did you end your claim. Did you do it by telephone or in writing? Tax credits keep records (apparently) of all correspondence in brief notes on your "account". In addition, if you or your ex called them they will have a voice recording in their system which can be accessed for many years (I think its called a "call management system"; CMA)

If you have relied on your ex cancelling the claim are you sure she did it. If she was receiving the payments into her account then you wouldn't know either way but are equally liable for any overpayment as you are both responsible for advising tax credits of the change. Often people only remember to advise them of a change when they receive the renewal letter and by them it can be months later.

I dont want to hijack this thread, but just a quick thanks for the above info, i wrote to the tax credit office and also telephoned, ive still got the recorded delivery details, so im not to worried just frustrated they can attempt to claim these payments back.

I havnt heard anything from them since so ill keep quiet, think they might of been phishing or something.

If the problems come back to haunt me ill post a separate thread with the details, thanks for your help again.