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

[Will Goodfellow]

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

[Will Goodfellow]

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 September 8, 2019 by Will Goodfellow

[Will Goodfellow]

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.

[Will Goodfellow]

Looking at this again, I don't know why I suggested contacting the DWP for a tax credit overpayment. I blame tiredness.

 

You need to submit a mandatory reconsideration to HMRC as soon as possible. You can fill it out online if you have a gateway account or print off the form here:

 

https://www.gov.uk/government/publications/child-tax-credit-and-working-tax-credit-appeal-form

 

Don't wait while HMRC drags its feet. If the mandatory reconsideration does not overturn the decision, you can then appeal. Post back here for assistance if you need to.

Edited September 25, 2019 by Will Goodfellow

[Will Goodfellow]

That's not surprising. You could chase it up but I'd be surprised if you receive a reply within a month.

Edited September 25, 2019 by Will Goodfellow