Tax Credit overpayments?

Q.   Every year I seem to end up with huge overpayments even though I have provided the correct information to the tax office. They recently changed the date of birth of my youngest child and when I discovered their error I was again landed wih an overpayment of over £400. Weeks ago I separated from my husband and on ending my joint claim I was informed of an overpayment of £755 for the 15 weeks from April to July. At this time they had also made me pay back over £900 in 16 weeks for another overpayment for which I still owe over £200 and I was receiving an awful lot less money than in previous years.

I don't know how to fight the problem any more and seem to get myself into more overpayments trying to sort it. I have grossly inflated my expected salary to try to avoid the overpayment situation. I had informed the Inland Revenue that my salary was to be £9200 for the 07/08 period although it is unlikey to reach that amount. After having repaid £931 since April I now have a further £1200+ to be repaid to them. What can I do?                                                    Sharon

A.    To answer this question fully would require a lot more information and you should see a welfare benefits specialist (available at your local CAB) for more specific advice. Here is a  a very general response which may be of some help.

Tax credits are Means Tested Benefits administered by HM Revenue and Customs HMRC. The rules governing Tax Credits are complex and calculations are complex as they take into account projected estimated earnings.

If you have changes in your personal circumstances you have to report them as soon as possible (within three months of the change) and also check that you have the right information in any decision notice.

Some hints and tips / steps to take are:

1. Ask for a benefit calculation so that you know roughly what you will receive in benefit
2. Get help to fill in your form
3. Check that the details on your award / decision letter are correct
4. If you need to report changes you can phone them in but then do it in writing and keep a copy
5. If you phone in to report a change you can ask for a transcript of the telephone call to be sent to you
6. If you dispute the decision then it is best to do this in writing and keep a copy.
7. If you have an overpayment and you believe is not your fault then you can ask the HRMC to look at the decision again by completing form TC846. You must specifically ask that they do not recover the overpayment for one of two reasons:

A)     The overpayment was due to an official error by the HMRC and that you could not have reasonably known the payments were not correct.

B)     That the overpayment being recovered would cause you severe hardship.

You will need specialist help to challenge these points of law as they are very difficult to argue. For example if you report a change and it takes them 6 weeks to change the payments they may say that you should have kept money aside to cover the change – that you reasonably knew that the payment was not correct.

Again it’s a complex area that needs Welfare Specialist Knowledge.

Disclaimer

The above is for general advice only, designed to give an overview of common problems, and is not intended to be comprehensive.  Where there is a potentially serious sanction or consequence we recommend people seek appropriate qualified independent advice.