09 Mar 2015

A question about : Working tax credits

Hi. I returned to work in June 13 following a period of 15 months unemployment due to redundancy. I was advised that I could claim working tax credits for the first 12 months of my new employment regardless of my salary. I completed the HMRC online questionnaire and this advised me I was entitled to claim so sent the claim form off and received these credits for 12 months. At the end of this period I received a renewal form which I completed and sent off knowing that I was no longer entitled. I then received an overpayment notice for the whole amount! I wrote to HMRC in August 14 advising that I believed they had made a mistake and never received a reply. I then received notification that they would change my PAYE tax code in April 15 to take the money back. I sent a recorded delivery letter on 20 October advising them that I believed they had made a mistake together with all relevant documentation. I have never received a reply. I have now spent many frustrating hours trying to talk to someone on the telephone only to be told last night that I have to pay this back even if they have made a mistake and that I will not receive a reply to my correspondence until May 15! Seven months from the date of my letter. Is there anything else I can do please? title=Mad

Best answers:

  • your initial award would have been based on the income from the previous year so, as you were not working, you would have received a confirmation of payment
    As your income was going to be more than Ј5k in excess of that amount then when you called to advise them of a new estimate for the current tax year they would have amended or ceased your payments
    If your income minus Ј5k was higher than the working tax credits cutoff then you would have been due no payments and any overpayment would need to be repaid
    Do you have anything in writing confirming that you were entitled "regardless of salary"? Did you advise them of your estimated income for the year or was your award purely based on the previous year?
  • If you disagree with the overpayment being collected via your tax code you can ask the tax office to stop it. I think you ring the tax office and then they give you a separate number to call. But you might have to make some sort of payment arrangement before they'll take it out of your tax code.
  • Recovery through your PAYE code is voluntary, however HMRC will only allow the claimant to refuse if they offer to repay via another method.
    The HMRC guidance explains the process as follows:
    'DMB will issue a letter, to the selected customers, which explains that HMRC are considering collecting the tax credit overpayment by adjusting their tax code and increasing the amount of tax they will pay in the next tax year. The letter asks the customer to call DMB on 0845 302 1421 within 30 days, from the date of the letter, if they do not want HMRC to take this action.
    The customer can contact DMB to discuss an alternative method of repaying the overpayment. DMB will not be aware of other financial commitments the customer has and it may be that in some circumstances agreeing a time to pay for the tax credits overpayment is more appropriate. If the customer does not contact DMB then checks will be made to ensure a code adjustment can be made. Existing safeguards that limit the amount that can be collected through PAYE will be preserved.

    It would appear that HMRC are getting a lot tougher in their collection of alleged overpayments.
    ...good luck !
  • Even when disputing an overpayment you will still be asked to make repayments. This is confirmed on their website - https://www.gov.uk/tax-credits-overp...ute-form-tc846
    If you don't want to pay through your tax code you'll need to make arrangements to pay directly. Ways to pay are here.
    Who told you that you could claim regardless of your income? And was this the exact wording used?
    When you made the initial claim it would have asked for your previous year income. So if you made a claim in June 2013 it would have asked for your income for tax year 2012/13.
    Did you call at any point between making the claim in June 2013 and the renewal in April-June 2014 to update your income?
    If not I cannot see how it is their mistake as your tax credit awards notice tells you to inform them of any income changes.
  • I was told by a Government job centre that I could claim regardless of salary and I have also seen an independent financial adviser since this overpayment came up and he confirmed I was entitled to it. When I made the claim in June 13 I told HMRC that I was starting a new job that same week and what the salary was. I was led to believe from the job centre and financial adviser that these benefits were to help people back to work for the first year after long term unemployment.
  • Yes, once I had filled in the online questionnaire to see if I was entitled to claim and also spoke to HMRC on the phone, I sent of the application form and received and awards notice and the money started going into my account the following week. I hear what you are saying about the advice but when I sought the help of the independent financial adviser last year at the same job centre he told me that every person in this country who goes back to work after long term unemployment is given this advice so I am really confused - HMRC knew I was starting work that week and what my salary was. I was led to believe that these credits were to help people back into work and were based on the previous year when I only 'earned' just of Ј3K which was my job seekers allowance.
  • I hope the independent financial adviser gave you better advice on other things that on the tax credits point. He is incorrect. You are not entitled to them automatically because you were out of work - it depends on your income and whether it was within the disregards that Caz explained.
    If HMRC have your income figures correct, then the overpayment is technically correct.
    You say that you told HMRC when you claimed of your estimated salary. When was this? Did you phone them after your submitted your claim and tell them your estimated salary?
    The award notices you received will have said that you must tell them if your 13/14 income is above XXXX (it would have shown an amount). If you can prove you did that, for example by requesting copies of the phone calls, then you may be able to dispute the overpayment.
    You can dispute an overpayment based on wrong advice from DWP as well as HMRC, but in this case it doesn't matter who made the mistake because the responsibility passed back to you to check the award notice and let them know if any of the information is wrong and to update them for your current year income.
  • There seems to be a general misunderstanding that an overpayment is triggered either by a mistake by the HMRC or the recipient.
    My experience suggests that overpayments can be triggered by the recipient simply informing the HMRC of change of income at the correct time and an overpayment can still be triggered. payments.