Confused by tax credits overpayment

[dustycat]

I can't get my head around this.

 

Ordinarily, we (as a couple) are not entitled to any benefits.

 

I went on maternity leave, only received SMP, went back to work.

 

A few months later I realised that my previous year's income having dropped so much because of being on SMP PLUS the disregard of £100 a week meant that we were possibly eligible for a small amount of CTC - so I rang them and they confirmed we were eligible.

 

I applied, I gave full details, including figures from P60s, P11D, childcare costs etc - EVERYTHING THEY ASKED FOR. Our circumstances changed, I notified them the following day. Our circumstances changed again, this time, hands up, I took 2 weeks to tell them, but I did tell them it applied from XX date so they backdated it.

 

They sent me a letter saying due to the most recent change in circs we are not paying any more (fine), and you have been over paid from XX date (the 2 weeks), so you have to give us that back. Ok, makes perfect sense to me.

 

Then I had the form that you have to fill in by the end of January. I filled that in, the only thing that was different than any of the information I had given them previously was an additional income of £63.

 

Now they have written to me and say I have to pay them back an overpayment of nearly £2k- basically the full amount I received.

 

I'm totally baffled by this, how can the difference of £63 mean a difference of £2000??

 

So I rang them to query it, and they said that because my income for THIS financial year, ie the year that has not yet finished, has increased by more than £5000, then I was not actually entitled to any of the tax credits they paid me.

 

I don't understand this at all. I spoke to an advisor on the phone when I originally made the claim and stated what my maternity pay was and what my usual salary was - they KNEW my drop in income was because of being on maternity pay, and that it would go back up to normal levels afterwards.

 

I'm totally confused as to how I am expected to take the money I am earning now, and transport it back in time to when I wasn't earning it.

 

Have I totally misunderstood the whole thing?!

[estellyn]

Can you clarify what your income was in the financial years we're talking about?

[dustycat]

I estimated 22800, and my actual was 22863.

 

This financial year it will be be £40+

[estellyn]

I estimated 22800, and my actual was 22863.

 

This financial year it will be be £40+

 

 

Is 22863 with or without the £100 per week deduction?

 

 

ETA: Also confused about what form you were completing at the end of January, as tax credit reassessment for the previous tax year happens April to July.

[dustycat]

Hi estellyn, that is with the deduction already taken out.

[dustycat]

Sorry, I'm not sure what the form was called as I sent it back to them - but it had a deadline of the 31st January.

[estellyn]

Sorry, I'm not sure what the form was called as I sent it back to them - but it had a deadline of the 31st January.

 

 

That would be your tax return, are you self employed?

[estellyn]

I think I might be getting it now. Is the overpayment from the current tax year or from last tax year?

[dustycat]

No, it wasn't my tax return, I'm confident of the difference between a tax return and a 4 page form from tax credits. I do have to do self assessment as I now have some rental income (fully declared to tax credits minus the £300 disregard). I did my tax return in November. The form with a deadline of the 31st was definitely from tax credits.

 

The overpayment was received by me in this financial year but related to my earnings of the previous financial year.

[estellyn]

No, it wasn't my tax return, I'm confident of the difference between a tax return and a 4 page form from tax credits. I do have to do self assessment as I now have some rental income (fully declared to tax credits minus the £300 disregard). I did my tax return in November. The form with a deadline of the 31st was definitely from tax credits.

 

The overpayment was received by me in this financial year but related to my earnings of the previous financial year.

 

 

Bearing in mind that I'm a little rusty on tax credits.... basically what has happened is that normally your tax credits award for the current year is based on the previous year's income. But if the current year's income is more than £5000 more than last year's income then your award will be based on this tax year's income. If HMRC weren't aware of the amount of your current year's income until January (three quarters of the way through the tax year), then you would have been paid too much tax credits since April, causing an overpayment from April to whenever HMRC processed the income change.

 

 

What's confusing is the 4 page form you're saying you received in January to complete is normally sent and completed between April and July, did you receive a form to complete then? If for some reason you didn't then there may be grounds to get some or all of the overpayment written off due to official error as you SHOULD have had the reassessment form April-July.

[dustycat]

Yes I did receive one in that time, as I originally applied back when DS was first born (2012) as that's when I was on maternity leave and thought I might get something as my income had dropped considerably (obviously!) but we were assessed at zero. I had the renewal forms at the right time in 2013 but nothing had changed on the form (was still on mat leave) so filled in, sent back, still entitled to zero.

 

Then I had a change in circs August 2013. My partner and I split up and he moved out. I rang up to ask if I was now eligible. The call handler said I needed to end my joint claim of zero and start a new claim, and that the quickest way was to do it with her on the phone. I did this, and answered all questions honestly. I was now back at work so my earnings were higher (I told her this) but I now had childcare costs too, plus a change in my other income. We went through it all, she said I was eligible, they started paying me. The conversation about earnings and so on was lengthy, because my income is made up of salary, a car allowance, an 'other benefit' on my P11D and also some rental income. So we had to go through each bit individually and we talked at length about it, we talked about me being on maternity leave because of the £100 disregard, we talked about me being back at work and earning again. At no point did she mention the if my wages were more than £5000 more than the previous year thing. In November 2013 I moved house, and then DS's dad and I decided to give things another go so he moved in. I rang tax credits and informed them he had moved in - I was 2 weeks late in doing that, but did tell them the actual date he moved in. They ended my single claim, and asked if I wanted to do a joint claim - to which I said no because we weren't entitled when it was just OH's income being assessed back in 2012 so I didn't see the point in doing it now when there were now 2 full salaries coming in.

 

I'm struggling to understand how an advisor on the phone can ask me such detailed questions, know my exact circumstances, I can be written to and told I'm being given 2000, I'm then given 2000, for them to then say "oh sorry actually after all that you weren't entitled, pay it back now". If you hadn't already guessed, I spent the money!

 

I'm not trying to keep money that I wasn't eligible for, if I thought I wasn't eligible I wouldn't have applied - but that's why I rang, to speak to a real person and get information.

 

Basically I'm going to have to find £2000 aren't I , gulp

[estellyn]

Yes I did receive one in that time, as I originally applied back when DS was first born (2012) as that's when I was on maternity leave and thought I might get something as my income had dropped considerably (obviously!) but we were assessed at zero. I had the renewal forms at the right time in 2013 but nothing had changed on the form (was still on mat leave) so filled in, sent back, still entitled to zero.

 

Then I had a change in circs August 2013. My partner and I split up and he moved out. I rang up to ask if I was now eligible. The call handler said I needed to end my joint claim of zero and start a new claim, and that the quickest way was to do it with her on the phone. I did this, and answered all questions honestly. I was now back at work so my earnings were higher (I told her this) but I now had childcare costs too, plus a change in my other income. We went through it all, she said I was eligible, they started paying me. The conversation about earnings and so on was lengthy, because my income is made up of salary, a car allowance, an 'other benefit' on my P11D and also some rental income. So we had to go through each bit individually and we talked at length about it, we talked about me being on maternity leave because of the £100 disregard, we talked about me being back at work and earning again. At no point did she mention the if my wages were more than £5000 more than the previous year thing. In November 2013 I moved house, and then DS's dad and I decided to give things another go so he moved in. I rang tax credits and informed them he had moved in - I was 2 weeks late in doing that, but did tell them the actual date he moved in. They ended my single claim, and asked if I wanted to do a joint claim - to which I said no because we weren't entitled when it was just OH's income being assessed back in 2012 so I didn't see the point in doing it now when there were now 2 full salaries coming in.

 

I'm struggling to understand how an advisor on the phone can ask me such detailed questions, know my exact circumstances, I can be written to and told I'm being given 2000, I'm then given 2000, for them to then say "oh sorry actually after all that you weren't entitled, pay it back now". If you hadn't already guessed, I spent the money!

 

I'm not trying to keep money that I wasn't eligible for, if I thought I wasn't eligible I wouldn't have applied - but that's why I rang, to speak to a real person and get information.

 

Basically I'm going to have to find £2000 aren't I , gulp

 

 

Not necessarily. Phone up and say you want to challenge the overpayment on grounds of official error, which it certainly sounds like - they'll send you a form to complete. You should also send a SAR for everything they have on your claim including transcripts of any calls (especially the first one if it is recorded). I take it that all the details on your award letter were correct when you received it - in which case there was NO way you could know you were being overpaid, and it IS official error.

 

 

Ok, the down side. You may end up having to appeal and going to a Tribunal hearing as HMRC are reluctant to change their decisions. Don't worry, it's not as scary as it sounds.

 

 

The very worst that can happen in these circumstances is that you make an arrangement to pay in instalments.

[dustycat]

Yes all details on the letters they have sent me have been correct (apart from the amount of tax credits, obviously, haha).

 

When I had my "pay us back the £2k" letter, I rang them and said I didn't understand how this happened etc, that I'd given them the details they had asked for , the advisor said there was nothing they could do about it until I get my renewal pack (between April and July) , that I need to fill that in, send it off, I'll get some sort of final statement and THEN if I don't agree with it etc I can get in contact with them at that point.

 

I'm now wondering if that is right as they seem to have messed up once already..... is that right?! Should I wait for renewal or should I fill in a form now?

 

Thanks so much for answering by the way.

 

I'll send off the SAR tomorrow. Knowing you can pay in instalments is a bit of a relief, I definitely feel less panicky about it !!!!

[estellyn]

Yes all details on the letters they have sent me have been correct (apart from the amount of tax credits, obviously, haha).

 

When I had my "pay us back the £2k" letter, I rang them and said I didn't understand how this happened etc, that I'd given them the details they had asked for , the advisor said there was nothing they could do about it until I get my renewal pack (between April and July) , that I need to fill that in, send it off, I'll get some sort of final statement and THEN if I don't agree with it etc I can get in contact with them at that point.

 

I'm now wondering if that is right as they seem to have messed up once already..... is that right?! Should I wait for renewal or should I fill in a form now?

 

Thanks so much for answering by the way.

 

I'll send off the SAR tomorrow. Knowing you can pay in instalments is a bit of a relief, I definitely feel less panicky about it !!!!

 

 

You should be able to challenge an overpayment decision now. This link should help:

 

 

http://www.hmrc.gov.uk/taxcredits/things-go-wrong/overpayments/dispute.htm

[abc123def]

My dd was 20 in June one year and so with my last payment due in the May for CTC I mistakenly thought I didn't need to send back the update form the July afterwards as my payments had already ended and I wasn't applying for the following year. I was on IR ESA at the time so fully entitled. I received a letter August 4th saying the money I had received earlier that year was an overpayment as I hadn't returned the form so I phoned them immediately and the man went through the form with me saying that though it was 4 days past the deadline it would be fine and I am entitled etc. Then in September letters started arriving demanding the overpayment back. It amazed me that though I had been fully entitled to the money, just because I had done the form 4 days late that they were saying they wanted the money back. Anyway I phoned them and said I had been declared BR after my final payment but was told the easiest way of dealing with it was to go through the appeals process so I did. Needless to say a lot of letters, many legal and threatening later and one whole year on HMRC wouldn't back down and would have won the Tribunal had I not then produced my BR certificate. The BR being something I had told them about a year before. The only reason I say this is to demonstrate the ruthlessness of HMRC and how they will not back down and will go all the way to get money back. What was told to me on the phone (that all we be ok and it didn't matter that the form was 4 days late) was not evidenced and not allowed as evidence. Only evidence in writing was counted.

[dustycat]

Hello, I'm back again

 

So, I've had my "final tax credits decision" letter. They say I owe them £1360 - which is a bit better than the £2000 they were originally asking for...

 

Awaiting response from SAR, I've also been putting a bit aside each month since my original post and will continue to do so, so that if I do need to make a payment I can at least offer something, and then hopefully pay the rest monthly. I *am* going to challenge the overpayment though as I do feel it meets the criteria for official error. I've pored over every letter I've had from them and my details are right every time except one - and in that one my income is HIGHER than what the actual figures ended up being, (which I corrected with a phone call), so I don't see how I could have known I was being overpaid until they told me.

 

So that's my update. My question is:

 

The most recent letter says:

 

"We will continue to seek recovery of the overpayment whilst we are considering your dispute"

 

So - should I set up a payment plan while the dispute goes through? And then if I am right they give it back? Or should I refuse to pay anything until the dispute process has finished?

[blondebubbles]

You will continue to receive demands during the dispute process. It's better to set one up then if it goes in your favour they will repay you.