I need help about a very Large HB/CTB Overpayment (I'm self employed)

[notastudent]

In 2013 I started claiming HB,

both myself and my husband are self employed.

 

 

We had only just set the business up in 2012

following him being made redundant and me having a baby.

For the first 3 tax years the business made a loss (2010, 2013, 2014).

 

 

In January 2017 they wanted to reassess us again ,

I made up the books (I was doing this anyway for the Jan 31st deadline)

and found we had made a small profit,

which was reduced by the tax losses brought forward.

 

 

I then also made up the next lot of accounts when the new tax year started in April.

 

The council have reassessed and said we were overpaid and we owe them around £9500 in HB and £3500 in CT, plus we have now accrued £400 in rent arrears while this is being sorted out.

 

 

As far as I can see the problem / over payment has been caused by the council using different figures than the tax man,

for example they have disallowed certain expenses which have left me scratching my head.

 

I had no way of knowing what they would or wouldn't allow, and on top of this they seem to have made up a lot of the figures.

 

I called shelter and they said they couldn't help,

I called CAB who said from what I told them I need to get a specialist solicitor,

but I have no idea how much this will cost and I have no savings,

I live week to week on our low income.

 

 

've written to the council, and copied their own letter and written corrections next to all of their figures.

 

This making me feel sick to my stomach,

I have no way of paying back what they want,

plus I think it's incorrect.

 

 

I psyched myself up to phone first thing but they aren't open until this afternoon.

I just can't believe when I've been 100% straight and always notified them of any changes that I'm now £14,000 in debt.

 

Does anyone have any experience of this sort of thing?

Is there anything specific I should ask or say when I do speak to them?

[unclebulgaria67]

No personal experience of this.

 

However, try not to be too stressed and fearful, that it stops you taking easy actions, which might help you resolve this. The council will just plough on with the process of tryng to collect these amounts.

 

What you need to do is ask the council for full details of their appeals process including referral to outside agency such as LGO. You must immediately raise a complaint with the CEO of the council by recorded delivery letter and advise that you believe a mistake has been made. That you are willing to work with the council to calculate an accurate assessment of what should be due. You should dispute the way the council has assessed the amounts due. The council should suspend collection while your complaint is being looked into.

 

What expenses has the council disallowed ?

[notastudent]

Thank you for the reply.

They have disallowed Depreciation, Research and Training and Sundry expenses,

I can I suppose understand depreciation but not the other two things as these were genuine business expenses.

 

 

One year they have missed off Postage and stationery,

other categories the figures are just incorrect,

and for 14/15 they've actually put we had £6000 less turnover than we did.

The whole thing is littered with errors and no explanations of why certain things are disallowed.

 

 

They've worked out the national insurance rates and these are slightly wrong but they only accounted for one person not two,

then they've calculated how much tax and class 4 contributions we've paid even though this was nil each year as we didn't earn enough.

 

 

even though some errors are in our favour I have pointed everything out.

I had provided them with accounts and also the HMRC submitted returns

I'm confused about how they've made all these errors

 

Thank you for your clearheaded advice about what to do,

it's very hard to be rational when you're feeling so scared and defensive.

[unclebulgaria67]

Start to write down each part you are disputing and include these in your complaint.

 

Re sundry expenses, you might need to account for this, as otherwise it could be cash taken out for personal expenditure.

 

At this stage you don't need a Solicitor. What you need to do, is start the official complaints process and use it to the end. Councils are struggling with finances and unless you go through a proper process of disputing this with them, they presume that you don't have a problem with their assessment.

[notastudent]

Sundry expenses was for things I wasn't really sure where to put, but I could have just have easily put them in a different category had I known they disallow this one. I am making notes of what you have advised me and I shall get underway with writing my complaint. Thank you!

[unclebulgaria67]

Perhaps a local accountant that has come across these issues might provide useful guidance. There might a local business link or advisory service that can point you to information or advice.

[ss002d6252]

You can ask the council to suspend recovery whilst looking at the Council Tax Reduction claim but there is no requirement for them to do so - they can continue to pursue the council tax even whilst a Council Tax Reduction dispute is on going.

 

The LGO can deliver an opinion on how the council have acted but if you want to dispute the Council Tax Reduction calculation it is something that needs to be taken to a Valuation Tribunal as it falls within their remit.

 

Council Tax Reduction schemes are localised and so , provided they stay within the prescribed legislative limits, they can run the scheme as they see fit - even if it's treats income differently to HMRC (Council Tax Benefit/Housing Benefit always had their own, individual, way of calculating income). You can only appeal the scheme, short of a High Court appeal, on the basis that it is 1) outside of the the prescribed legislative limits and/or 2) it is not being calculated in line within their own scheme - if both of those criteria are met then the valuation tribunal couldn't find in your favour.

 

Craig

[notastudent]

Thank you to everybody for their advice. I have made some progress, the council are reassessing the claim again and have sent me a letter to say they are halting recovery of the overpayment. However I have now received two letters, one from the housing to say the entire amount is now due, and another from the Council tax to say that if I don't pay within 7 days it will go to the Magistrate. I called them and they said there are no notes on the system about halting the overpayment and if I can't afford to pay it to let it go to the Magistrate and then fill in an income and expenditure sheet and an affordable amount can be arranged.

 

This doesn't seem right to me, how can they take such action on a disputed overpayment before they have finished re-assessing it?

 

Is there any reason I shouldn't do as they've suggested? My only alternative is to put the payments on my credit card as I simply don't have the £400 a month the council tax want. FYI The actual monthly council tax amount due is only £122 which I have paid, the rest is made up of the overpayment.

[ss002d6252]

This doesn't seem right to me, how can they take such action on a disputed overpayment before they have finished re-assessing it?

There's nothing within council tax legislation (now that council tax reduction is a council tax discount within legislation) that says they have to stop any action to bill for or recover monies. The magistrate, if it gets to the liability order application stage, is specifically prevented in law from considering any discount/exemption dispute when granting the order (they fall within the remit of a tribunal).

 

By obtaining the liability order and then holding action / accepting a payment arrangement the local authority can then move action on quite quickly of you were then to default.

 

The main reason on not halting action immediately is to stop someone simply saying "I dispute this" and bringing the whole collection process to a halt - whilst there many genuine disputes out there are, unfortunately, too many who would try and use the system to get out of paying.

 

Craig