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Wife and I bankrupt June 19. HMRC taken recalculated award against debt ?

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Hi all 

 

my wife and I filed for bankruptcy in June this year and was granted in June. 

We have overpayments with hmrc that are included in the bankruptcy. 

 

Our twins were awarded Dla from 13th June and our tax credits were transferred to universal credit on  24/07/19 meaning there was an underlying award for tax credit premium for this period. 

 

Have received the end of year (in year) award notice- 

total due for period  £ 6270.22

total paid for period £ 4575.66

 

£1694.56 difference which would have been due.

They have taken the whole amount against previous overpayments leaving £0.00. 

 

Ive been told it’s their policy ?

How can they force a payment against a protected bankruptcy debt !! ?  

Also being a disabled premium for children also !!!  

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As with all benefit decisions, you appeal using their processes as explained in their letter.   You apply for mandatory reconsideration and You ask for a written statement of reason asking for details of the decision to apply the overpayment to the award notice, when the overpayment was part of the bankruptcy.  Ask for details of the legislation that allows HMRC to do this.

 

You need to do this with 30 days of their decision letter. 

 

Applying for mandatory reconsideration can be done by phone, letter or I think there is a form on Gov.uk how to appeal a benefit decision.

 

 

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So can you confirm that if the debt is prior to the bankruptcy date then they shouldn’t have offset it ? As hmrc tell me they can and it’s their policy ... 

ty 

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Do as Unclebulgaria suggests, HMRC have form for passing overpayments even disputed ones over to UC and UC will just deduct without question.

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No don't know the legislation well enough.  Policy can only be informed by legislation passed by Parliament.

 

Therefore ask HMRC for the specific legislation which they have used to apply the overpayment to the award statement, when they are aware that the overpayment was included in bankruptcy, 

 

When they tell you it is a matter of policy, this might mean that HMRC don't have the legislation details to hand.

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I’m waiting for a call back from a manager atm - up to 5 days !  I’ve filled in online form and submitted it in the mean time. 

My OR said they should only take it against debts from fraud etc which I do not have any.

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Also had a letter today saying that £1221.09 has been passed to universal credit for recovery. 

 

So just spent over an hour getting through to debt management at DWP and HMRC have passed this onto them to collect from our UC award :@ 

the guy at debt management has just checked our bankruptcy on line and confirmed it - put it on hold for 3 months. 

The cheeky back handed sods!

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Like I said, HMRC have form, and  seem to make it up as they go along, now get that request for Mandatory Reconsideration in, you need to do that to progress further The pass to UC loophole has been used by HMRC to claw back disputed Tax Credit overpayments even from years ago.  UC don't ask about the OP they just deduct it from an award and HMRC deny they have any records, as its now gone to UC. Seen that one a couple of times myself.


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3 minutes ago, brassnecked said:

Like I said, HMRC have form, and  seem to make it up as they go along, now get that request for Mandatory Reconsideration in, you need to do that to progress further The pass to UC loophole has been used by HMRC to claw back disputed Tax Credit overpayments even from years ago.  UC don't ask about the OP they just deduct it from an award and HMRC deny they have any records, as its now gone to UC. Seen that one a couple of times myself.

 

Hmrc did try the it’s been passed to UC call them but didn’t have any of it. 

 

Ive done the online MR, and also waiting for call back from manager. 

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Its wait and see now then whole system is a mess, as HMRC must have been aware of the OP being part of the bankruptcy, they would have had to register their interest with the Official Reciever, however the pass to UC and deny is their latest MO to claw back money they deemed is owed, whether part of a BR or not, they might say oops sorry guv too late now, UC are collecting it anyway.


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20 minutes ago, brassnecked said:

Its wait and see now then whole system is a mess, as HMRC must have been aware of the OP being part of the bankruptcy, they would have had to register their interest with the Official Reciever, however the pass to UC and deny is their latest MO to claw back money they deemed is owed, whether part of a BR or not, they might say oops sorry guv too late now, UC are collecting it anyway.

 

UC have put hold on it, and will make UC aware it’s not recoverable to by sending them BK notices. 

HMRC are pushing their luck as they have already confirmed to the OR their interest and amount 

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Thanks you have got things in motion keep us updated

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7 minutes ago, brassnecked said:

Thanks you have got things in motion keep us updated

 

 

Will do, Ive taken HMRC to task before and will do it again.  My OR isn’t interested in the money going to them and said the only time HMRC can take it (as in not wipe the debts) is fraud. Which this isn’t. 

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Spoke to hmrc today and the normal advisor transferred me to a different team for overpayments etc. I ended up speaking to a team leader who said there is a complaint on the screen already and will be resolved in 15 working days. 

He Confirmed as we are bankrupt this should not have happened and it appears they have not followed their own processes to null the overpayments before the bankruptcy. 

 

I dont know if it’s worth following up with a written complaint too, just to make clear and force point by point. 

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Probably is in case they accidentally forget, or pass it to Debt Recovery again later.

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The bailiff: A 12th Century solution re-branded as Enforcement Agents for the 21st Century to seize and sell debtors goods as before Oh so Dickensian!

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58 minutes ago, brassnecked said:

Probably is in case they accidentally forget, or pass it to Debt Recovery again later.

 

Written and sent :) signed for. 

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Hi

 

Exactly what was the overpayment for that HMRC are trying to recover via your Benefits?

 

Although you may have the Court paperwork on your Bankruptcy you should have went through an insolvency practitioner appointed by the court for this.

 

I would recommend contacting the insolvency practitioner that was dealing with your Bankruptcy and ask them for clarification if XX Debt was actually included in your Bankruptcy, advise them of your situation and if this can be recovered by HMRC and if they could forward a letter from them to you as further evidence.

 

 


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6 hours ago, stu007 said:

Hi

 

Exactly what was the overpayment for that HMRC are trying to recover via your Benefits?

 

Although you may have the Court paperwork on your Bankruptcy you should have went through an insolvency practitioner appointed by the court for this.

 

I would recommend contacting the insolvency practitioner that was dealing with your Bankruptcy and ask them for clarification if XX Debt was actually included in your Bankruptcy, advise them of your situation and if this can be recovered by HMRC and if they could forward a letter from them to you as further evidence.

 

 

 

Just running overpayments since 2012 roughly, which had built up and up. 

We have an official receiver who has confirmed hmrc debt is included and they have made a claim on the estate (there is no estate), she has confirmed that hmrc can only recover debts related to fraud which mine are not. She has also confirmed hmrc are being very underhand and she will be taking them to task too. 

 

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48 minutes ago, Will Goodfellow said:

Did you ever receive an Administrative Penalty for the tax credit overpayment?

 

Not that I’m aware off. Never any fines or anything. 

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If you did not receive an Administrative Penalty, and the date of the decision letter informing you of the overpayment was before the date of the bankruptcy order, the tax credit overpayment is a provable debt and should be included in the bankruptcy.

 

See paragraphs 40.44 - 40.46 of the Insolvency Service Technical Manual, this is what your OR will be referencing:

 

"40.44 Overpayment of state benefits  

Overpayment of state benefit, such as housing benefits, jobseekers allowance or tax credits may be made as a result of mistakes, change of circumstances or fraud.

It has been held by the Supreme Court [note 23] that overpayments of benefits are contingent liabilities (see paragraph 40.9) and, as such, are provable debts.  This decision over-ruled earlier decisions generally declaring such debts as non-provable [note 24] [note 25].

Such a debt incurred through fraud would not however be released upon discharge (see paragraph 40.178).

 

40.45 Repayment of overpayment of benefits where the overpayment was a provable debt

Bankrupts who have repaid, or are repaying, a debt which would be provable as a result of the over-ruling of earlier case law (see paragraph 40.44) may have a claim against the Department for Work and Pensions (‘DWP’) for the recovery of those monies. This is a matter between the bankrupt and the DWP. The official receiver has no claim on any monies repaid to the debtor. 

 

40.46 Post-bankruptcy benefit overpayments

It is considered that overpayments which are made after the date of the bankruptcy order are a post bankruptcy liability, for which the bankrupt would be liable to repay, even if they arose following an error (the decision to overpay) which occurred before the order."

 

https://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch37-48/chapter40/part2/part_2.htm

 

Hopefully this 'administrative error' will be resolved soon.

Edited by Will Goodfellow
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Got to wait up until the end of the month for them to get back to me. Absolutely ridiculous considering it’s their error ....! 

Meh fed up. 

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Just had a call from a complaints handler who is dealing with my mp’s contact. 

 

She said her view is ‘the overpayment has been recovered as it’s money I’ve already been historically paid so therefore in her eyes shouldn’t now be repaid to us’ 

 

I pointed out to her that the bankruptcy hadn’t been processed correctly their end, and had it been the overpayment wouldn’t have been there to recover in the first place. It took some explaining for her to acknowledge what I was saying but she is going back to the bankruptcy team to put my point to them. 

 

She kept saying that the recovery has been written off in the bankruptcy- but it hasn’t as they have in award recovered it. 

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You can submit a mandatory reconsideration to the DWP challenging the decision to recover the overpayment. This will start the appeal process, and if the decision is not overturned, you then can appeal to the First-Tier tribunal. A mandatory reconsideration should be submitted within one month of the decision letter to recover the overpayment, you have up to thirteen months with good reason but it should be submitted as soon as possible.

 

Don't rely on the DWP's bankruptcy team to make any effort to repay the money.

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