tax credits overpaid due to not filling in a form

[mikehunt69]

I was claiming tax credits, and due to not filling in their update form as required, they stopped the tax credits, and are sending me threatening letters to pay it back.

they said it's too late and I just have to pay. this dates from around last july.

 

to be clear, I should not be paying them anything according to my income, in fact they would owe me things, but obviously this depends on the claim being valid etc.

 

is there any option besides just paying them?

[mikehunt69]

So the latest I have is a letter from LCS saying

 

'Notice of further action'

and demanding ~£1000

 

It's not a letter before action, just a 'we might do something further if you don't pay up.

 

As I understand it I just ignore the letters from LCS. Will HMRC take further action, and can I get the debt cancelled with them?

[smokiejoe]

It sounds as though you failed to complete your Annual Declaration (S17), sent out each year to confirm details of the claim and houseold circumstances for the previous year, and to make sure income and circumstances used for calculating and making ongoing payments is correct. Which year declaration was it? For example, if the declaration is for the 2015/16 period, you might be having the wrong income used, causing an overpayment to be shown for that year. Further, if you had payments made from 6th April 2016, all payments made from that period onwards, while HMRC were awaiting the declaration to be made, will automatically become overpayments whether you meet the eligibility criteria or not, because you failed to provide the data needed to verify ongoing entitlement in time.

 

You can tell LCS you want the debt passed back to HMRC and deal directly with HMRC. HMRC will still look to get any overpayment back.

 

If you believe you still have an ongoing entitlement, get in touch with the helpline and look to make a new claim, as any entitlement could help towards any outstanding debt.

[mikehunt69]

I have a letter dated 15/8/2016 saying:

 

you do not complete the tax credits declaration form sent on 17/5/2016

 

child tax credit award for 2016-2017 is: £0.00

less already paid £1000

therefore you must pay back £1000

 

you have until 16/11/2016 to dispute recovery of the overpayment.

 

it looks like I'm late and nothing I can do? https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509048/COP26.pdf

 

I can pay off the amount, but obviously I would like to delay that if possible.

[antone]

Tax Credits is paid provisionally in some cases. What I mean is that they will send you out a form asking you to report your circumstances each year. You get a few months to complete this form, and during that time you will still be paid whatever you were getting before. This is the S17 form that smokiejoe refers to in the post above.

 

However, your entitlement for the next year is worked out based on what you answer on that S17 form. If your answers indicate a reduced entitlement, your Tax Credits will be reduced for the remainder of the year to take account of what you've already been paid. If you don't complete the form at all, you'll lose all entitlement and anything you've already been paid will be regarded as overpaid and HMRC will seek to recover it. It sounds like this is what has happened.

 

There isn't a whole lot you can do since you didn't return that form. As smokiejoe said, if you think that you may still have an entitlement to TC you could make a new claim which might mitigate things a bit. This is one of the potential pitfalls of Tax Credits - it's intended to be helpful but can cause this problem if the form is not returned.

[smokiejoe]

If you choose to deal with LCS, contact them about a repayment schedule over a period of time, including if you simply want to delay and then pay in a lump sum. If you have requested the debt goes back to HMRC, once that's happened, get in touch with HMRC overpayment helpline and get an agreed repayment schedule with them.

[mikehunt69]

is it not possible just to offset against my new TC claim?

[dx100uk]

yes as detailed in post 5

[Lilypad1]

I had a similar issue a few years ago.

 

 

I actually sent in the form and the advisor even said to me 'we could have lost it' that happens a lot and they know it.

 

 

When you send anything to them make sure it's always recorded

 

They wanted me to repay and were sending letters.

 

 

I was not claiming TC at that point, when I subsequently did another claim they stopped chasing it