Limitation act and tax credit overpayment

[Rach2174]

Hi, I was wondering if anyone could help. I've been in dispute with HMRC for years now as they allege I owe them nearly £2000 from 2003/2004. I have been told that limitation of proceedings act prevents them from chasing this overpayment but they still are! I have also heard that they can still make demands but are barred from taking court action. I have no intention to pay and have always disputed the debt. I know tax credits affects a lot of people so was just wondering if anyone had any advice about this? Thank you.

[nemesis45]

Re: Limitation act and tax credit overpayment

Hi, I was wondering if anyone could help. I've been in dispute with HMRC for years now as they allege I owe them nearly £2000 from 2003/2004. I have been told that limitation of proceedings act prevents them from chasing this overpayment but they still are! I have also heard that they can still make demands but are barred from taking court action. I have no intention to pay and have always disputed the debt. I know tax credits affects a lot of people so was just wondering if anyone had any advice about this? Thank you.

The Limitation Act 1980, lays down the times after which court cannot be taken.
HMRC can ( and so can the DWP) continue to press for payment without any time
bar except on court action.
Unfortunately Government debts don't go away.
There's the possibility that the alleged debt may be passed to a debt collection
agency to pursue for payment.

nem

[des8]

Re: Limitation act and tax credit overpayment

Hi and welcome
Limitation Act applies to Tax Credit overpayments.

Have you pushed this case to the Adjudicator Office stage.
HMRC continue to push for repayment even when their own manual (see below) states it is unenforceable through the courts!
DMBM595080 - Pre-enforcement: limits in enforcement proceedings: limitation legislation

Limitation Act 1980

England and Wales

Debts that are not tax
In England and Wales only, the Limitation Act 1980 provides that recovery action for debts should commence within six years from the debt becoming payable. But Section 37(2) of the Act excludes proceedings for recovery of tax or duty and interest on tax or duty thus there is no time limit for those debts.
Other debts that are not tax, for example

• contract settlements
• tax credit overpayments
• Child benefit overpayments
• National Insurance Contributions
• Statutory payment recoveries (Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay)
• overpaid Child Trust Fund contributions
• Student Loan repayments and
• National Minimum Wage Act penalties

are subject to the Limitation Act, and action must be taken within six years “from the date on which the cause of action accrued”. In this context an action is the lodging of a complaint in the magistrates’ court, the issue of a county court claim form or the levying of distraint. In this same context the date on which the cause of action accrued is the original due date of the liability.
If an action is not taken within the time limit, it could be defended successfully on the grounds of limitation.
The date for limitation may be advanced by a number of means;

• payment made against the debt (where tax and NIC are being collected alongside each other, unless a debtor specifies otherwise, assume that any payment on account is made against both)
• acknowledgment of the debt - the acknowledgment must be both explicit and unequivocal.
• where the debtor has concealed any material facts in relation to the debt which prevented the creditor pursuing the debt from the date it should have been paid.

[Nibbler]

Re: Limitation act and tax credit overpayment

May also now be possible for tax credit overpayments to be recovered from wages on behalf of HMRC by DWP using their Direct Earnings Attachment powers, which as they don't require court proceedings can also be used even if the debt is statute barred.

http://www.legislation.gov.uk/uksi/2013/384/made and http://www.legislation.gov.uk/uksi/2014/3280/made

[des8]

Re: Limitation act and tax credit overpayment

It is a bit odd, bearing Nibbler's post, that the October 2015 edition of COP26 doesn't mention Direct Earnings Attachment as a way of recovering
overpayments.
http://www.gov.uk/government/uploads...3492/COP26.pdf

[FlamingParrot]

Re: Limitation act and tax credit overpayment

I've been chased by a number of DCAs for an alleged overpayment dating back to the only period where I claimed (2010/2011) which HMRC were never able to provide a statement or breakdown for. It's been round the houses for years, the last DCA returned it to HMRC who wrote to me saying that if I didn't pay, they would pass it on to a DCA! So now I've got LCS writing to me. DCAs haven't got any powers to obtain DEAs or enforce in any way so it's rather odd that HMRC would choose to pass it on to them.

I was under the impression it was just DWP benefit overpayments that could be recovered via a DEA. :noidea:

[Nibbler]

Re: Limitation act and tax credit overpayment

Not any more, in theory. Practice is different. It was a long time before DWP themselves stated using them much after a limited trial, and even now they are not something you hear of much.

May well be that although the power now exists from 1st April 2015, that HMRC are similarly as a matter of current policy not asking DWP, to use those powers? If nothing less they would require some backend organising to get a scheme between the 2 going.

It is an 'enabling' piece of legislation.

I've been chased by a number of DCAs for an alleged overpayment dating back to the only period where I claimed (2010/2011) which HMRC were never able to provide a statement or breakdown for. It's been round the houses for years, the last DCA returned it to HMRC who wrote to me saying that if I didn't pay, they would pass it on to a DCA! So now I've got LCS writing to me. DCAs haven't got any powers to obtain DEAs or enforce in any way so it's rather odd that HMRC would choose to pass it on to them.

I was under the impression it was just DWP benefit overpayments that could be recovered via a DEA. :noidea:

DCA could not themselves.

But the change is clear. From the explanatory notes of the legislation that from 1st April 2015.

Basically a power they are keeping in their back pocket for future use?

2. Purpose of the instrument

2.1

This order allows the Department for Work and Pensions (DWP), alongside Her Majesty’s Revenue and Customs (HMRC) to collect tax credit debt (covering overpayments, penalties and interest) so that DWP can collect that debt by the methods it uses to collect its own debt, including deductions from benefit and Direct Earnings Attachments.

7. Policy background

7.1

The Welfare Reform Act 2012 introduced a new benefit, Universal Credit, to replace a range of existing working age benefits including tax credits.

7.2

This will ultimately result in the abolition of taxcredits as new claims are submitted for Universal Credit and existing tax credit claims are, over time, migrated to the new benefit.

7.3

Currently HMRC recover any excess payments (i.e. overpayments) by a number of methods including by adjustment to any on-going taxcredit award of the person owing the debt, which is the simplest and most cost
effective method of recovery.

7.4

In the future there will be no on-going tax credit claims and HMRC will need to use other, less cost effective, methods of recovery.

7.5

In order to protect public funds and recover overpaid amounts as cost effectively as possible in the future we are legislating to enable recovery of tax credit debt by DWP by the methods it uses to collect its own debt, including deduction from benefit and Direct Earnings Attachments.

[wales01man]

Re: Limitation act and tax credit overpayment

I would expect that this Government would make sure now or later that the law exists to recover money overpaid or owed ,
After all if they just stop asking for repayment it loses credibility and some will ignore all demands.

I would add that the debt should be proven not just a figure on a demand letter and HMRC should not pass any collection onto private companies

[Rach2174]

Re: Limitation act and tax credit overpayment

Thanks all, it's all very confusing! I will continue to dispute the overpayment. I have had three separate debt collection agencies chasing for payment but they have all referred the case back to HMRC when the limitation act is mentioned. I don't hear anything for months, maybe a year before they start chasing again. I have written to AO but had a very confusing reply stating the case was not at the stage they could intervene? Something like that!

[FlamingParrot]

Re: Limitation act and tax credit overpayment

Thanks all, it's all very confusing! I will continue to dispute the overpayment. I have had three separate debt collection agencies chasing for payment but they have all referred the case back to HMRC when the limitation act is mentioned. I don't hear anything for months, maybe a year before they start chasing again. I have written to AO but had a very confusing reply stating the case was not at the stage they could intervene? Something like that!

Your experience mirrors my own, even though in my case, the alleged overpayment is not yet subject to limitation, being from the period 2010/2011, however, that's exactly what they've done: pass it to a number of DCAs (probably 3 or 4), then back to HMRC, then I don't hear a thing for months.