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MC1975

Very worried over tax credit overpayment

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Hi all and thanks in advance for reading.

 

I sent up a ltd company almost 10 years ago. I was paying myself £600/month and claiming approx £8,500 working tax / child tax credits each year. We now have 3 children aged 13,9 & 4. My wife was in part time employment earning a similar amount to me. We never drew any dividends at all.

 

Then we started making money. The dividends we drew were as follows... 2008 - £2,000, 2009 - £16,000, 2010 - £18,000, 2011 - £20,000, 2012-£25,000. My wife started working for the business 2 years ago and is paid £610/month.

 

I was convinced that we did not have to make HMRC aware of the dividends as the tax etc had been paid on these amounts through the business in the appropriate manner. The business pays corporation tax & VAT and has always paid everything on time.

 

We have always advised HMRC of all the changes in salary for my wife, and also whenever we paid for childcare and also when it was subsequently cancelled. It is just the non-divulging of the dividends that is the problem. We received a letter last week stating that they were investigating as their records showed that we received a dividend payout of £16,666 for yr ending April 2012. TBH, I do not know where that figure has come from as Business year End report shows £25,000.

 

I am terrified. As mentioned, for some reason I was convinced we didn't have to tell them about the dividends - I wrongly assumed we went off our P60s. I know that I was misguided. What will happen? How much am I likely going to have to pay back? Will my details become public knowledge - It would have a massive impact on my business if I am charged as a benefit fraud, as that is really what I am, whether it was intentional or not. Can't eat or sleep. I have an appointment with CAB on Friday, but wondered if anyone out there could help before then.

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The more I read the more worried I am getting. Am I going to prison???

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Hello there.

 

I'm sorry you haven't had any replies yet and hope people will be along later. I'll also move this to the HMRC forum and leave you a link. If I've read you rightly, you're asking about tax credits, which is not the same thing as benefits.

 

I don't think you should worry about prison, it's very rare. From what I've read on threads, here, the tax credit people seem more relaxed than the DWP.

 

You will need to tell them though, now your are aware of the problem and you will need to repay any overpayment. I believe people from here have rung them and found them not too bad. Have a read around similar threads in the HMRC forum, plenty of people have been through something similar. :)

 

My best, HB


Illegitimi non carborundum

 

 

 

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Hello again.

 

The other thing you could do is to speak to your local CAB. They should have contacts with the HMRC and I know they've rung on behalf of people here.

 

HB


Illegitimi non carborundum

 

 

 

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Hello there.

 

I'm sorry you haven't had any replies yet and hope people will be along later. I'll also move this to the HMRC forum and leave you a link. If I've read you rightly, you're asking about tax credits, which is not the same thing as benefits.

 

I don't think you should worry about prison, it's very rare. From what I've read on threads, here, the tax credit people seem more relaxed than the DWP.

 

You will need to tell them though, now your are aware of the problem and you will need to repay any overpayment. I believe people from here have rung them and found them not too bad. Have a read around similar threads in the HMRC forum, plenty of people have been through something similar. :)

 

My best, HB

 

 

It is family tax credit and working tax credit that I am worried about. It has been a genuine error on our part(I bet everyone says that!) but have worked out that over the last 4 years we have received almost £45,000 in tax credits. We are going to see CAB on Friday. Should we get the house on the market or speak to a solicitor? Or do we wait until we know what HMRC are going to do? Seriously petrified now.

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Hello again.

 

It's a shame you have to wait to see CAB because I hope they will be able to reassure you.

 

I know it's hard, but please try to keep a perspective on this because it seems to be running away with you.

 

I think you should wait to see what the CAB and/or HMRC say. If the CAB think you need a lawyer, they will tell you.

 

HB


Illegitimi non carborundum

 

 

 

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Thanks for your words of comfort! That is exactly what my wife has been saying - its easier said than done though! Would appreciate any other comments from anyone in a similar position or a position to help!

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Does anyone know how long the maximum length of time is to pay back overpayments to HMRC? I am assuming it will be close to £40,000 which terrifies me, but if I was able to pay over 5-10 years we could probably manage. PLEASE HELP

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Hello again.

 

I only know what I've read here, but my gut feeling is that HMRC have not been overly heavy handed. It would be nice if someone more in the know than me could answer your concerns, I'll try to get you some help.

 

HB


Illegitimi non carborundum

 

 

 

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Ok its unlikely you will go to prison. You made a genuiene (sp?) mistake which has resulted in the over payment so they will most likely ask you to pay it back. I wouldn't like to guess at the time period but they were pretty fair with me when I got overpaid and we managed to come to an affordable repayment plan.

 

The best advice I can give you is to go to the CAB for some advice and then sit tight until they have investigated your situation. Also supply them with any details they ask for so you are seen as being compliant

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Thanks for that. Is it likely that they will take me to court? With running a well known business in the area I am massively concerned that publishing info would have a negative impact on future work. I have worked out that if they would accept payment over a 4 year period I would be able to just about cope, as long as there is no negative impact on the business. If court action was pursued, the ability to pay back over 4 years would be massively affected!

 

Also, how do I convince them that it was a genuine mistake - I am sure that is what everyone says!!! All our council tax etc is always paid on time, and from business point of view the same applies to Corporation Tax, VAT, PAYE etc. Would they take that into account before deciding to prosecute, or would they just view that as a completely unrelated matter?

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Thank you for answering the SOS, Ros1609. :)

 

HB

 

Yeah thanks. And you too HB. It is nice to know there are people out there that want to help!!!

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Yeah thanks. And you too HB. It is nice to know there are people out there that want to help!!!

 

It's what we're here for, but it's always nice to be appreciated. :)

 

I still think you should rule out thoughts of court. I don't remember seeing it here. People make mistakes, and you're telling them before they find out, aren't you?

 

HB


Illegitimi non carborundum

 

 

 

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No they have written to me..."We received a letter last week stating that they were investigating as their records showed that we received a dividend payout of £16,666 for yr ending April 2012. TBH, I do not know where that figure has come from as Business year End report shows £25,000." I put this in the first post. Had they not written to me about it I would have continued to claim the benefits as I was unaware that we had to disclose dividends, and therefore wasn't aware we were doing anything wrong! I wrongly assumed we went solely off P60. I know it sounds stupid in hindsight!!!!

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Hi, I don't have a lot of tax credits experience, or what their current policy is on prosecution, but a few years ago, they rarely prosecuted, and simply recovered the overpayments back through the ongoing tax credits award. My best advice is come completely clean, send details of all the dividends you received, and explain that you were unaware these needed to be declared. Make it clear you want to repay the amount. Be contrite, it helps. Hopefully the worst that will happen is recovery through your tax credits award, or you'll need to make an arrangement to pay installments if you do not have an ongoing tax credits award. I can't make any guarantees about what will happen, but I had a client with £50,000+ tax credit overpayment, who wasn't prosecuted. So best not to get too stessed about something that probably won't happen.


We hang the petty thieves and appoint the great ones to public office ~ Aesop

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Thanks Estellyn. I really hope that that is what the outcome will be. Really hope that paying £1,000 per month back for the next 4 years will be accepted without further issues. I still need to know what they say I owe them. I have only had the initial letter from them telling me they are investigating so hopfully I am preempting any potential issues. I feel so stupid!!!

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Don't feel stupid. Mistakes happen in life. Tax Credits rarely prosecute so I highly doubt you will be taken to Court or have anything happen that will have an effect on your business. Like I said earlier, go to the CAB for some advice then sit tight until you know exactly how much you need to pay back. Then ring them and make them a repayment offer

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Thanks Estellyn. I really hope that that is what the outcome will be. Really hope that paying £1,000 per month back for the next 4 years will be accepted without further issues. I still need to know what they say I owe them. I have only had the initial letter from them telling me they are investigating so hopfully I am preempting any potential issues. I feel so stupid!!!

 

We've all made mistakes. Just don't offer to repay more than you can afford - it is better to make an affordable smaller repayment for longer than fail to pay the larger repayment at some point, which would mean further diffciulties. Given your stated income, £1000 a month seems excessive to offer - £100 a month plus whatever tax credits you get, would seem adequate.


We hang the petty thieves and appoint the great ones to public office ~ Aesop

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Thank you Estellyn and Ros1609, it's good of you to express an opinion.

 

MC1975, are you feeling a bit better now? Seriously, getting stressed about it won't help and this is spoken as a serial worrier. Take this in logical steps and see what CAB say on Friday, then take it from there.

 

HB


Illegitimi non carborundum

 

 

 

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If it's any help they will accept payments over a 10 year period without any financial statement re income/expenditure - if you want to pay over a longer period than 10 years you have to supply detailed financial info for your household.

 

I made an arrangement with them yesterday to repay over 10 years - hopefully i will repay quicker than that but they were very insistent that I didn't agree to a plan I couldn't stick to.

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Thank you very much, What should I do. :) I hope this will reassure our OP.

 

HB


Illegitimi non carborundum

 

 

 

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Thank you very much, What should I do. :) I hope this will reassure our OP.

 

HB

 

Really??? Can u supply further details? How much was owing? What did they accept? Was court needed?

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Really??? Can u supply further details? How much was owing? What did they accept? Was court needed?

 

Hello again. You've posted the same thing three times now. If you can't see what you've posted, you possibly need to refresh the page. :)

 

HB


Illegitimi non carborundum

 

 

 

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