Working Tax Credits Overpayment

[ash3011]

Hi.

Can anyone help me with this? I’ve been trying to get an appointment with Citizens Advice here in St Helens for weeks and have been unsuccessful so I’m trying to get some information here.

I’ve had a demand for a working tax credits overpayment and I don’t believe I should have to pay it back.

Briefly, I was self-employed from October 2013 and claimed and received working tax credits. Every year I sent in my self assessments accurately declaring my income and expenses. The reality was I was making no money, operating at a loss.

In October 2016 I had a letter from HMRC asking for information to check my eligibility for tax credits. I sent them the information (the same information I had always been sending them) and they decided I wasn’t entitled to tax credits. I asked them to reconsider, they didn’t. They stopped the payments and eventually I got a demand for an overpayment of £1806.42.

I wrote to them and told them I thought that was unfair since I had been completely open and transparent about my circumstances all along, that nothing had changed and nothing had been kept from them. If I didn’t qualify for working tax credits the error was not made on my part and I shouldn’t have been given them.

Three and a half months later I received a letter saying they had considered the information I provided, checked their records and decided that the overpayment is correct and I will have to pay the money back. Oh, and I have 30 days (time’s up this Friday, 2 March) to provide new information to show they have failed to meet their responsibilities (hence my trying and failing to get an appointment with Citizens Advice).

What do I do?

Thanks.

[ash3011]

Anyone?

[Amethyst]

Hi Ash, Apologies this was missed yesterday. Have you managed to get Tax Credits to send you their calculations ?

[ash3011]

Hi Amethyst. Thanks for responding.

As I said, I'd received a demand for the overpayment, sent a reply saying I didn't think I should have to pay it back and just received their response telling me they have decided the overpayment is correct and I will have to pay it back.

The letter says that their compliance department ended my self-employment and because of that I received £1,806.42 that I was not entitled to. No other calculations.

I'm sorry to say I hadn't really understood anything about the dispute process until now. I think now I have to prove that they made a mistake (in paying me) by not meeting their responsibilities. Is that right?

[Amethyst]

They ended your self-employment ? Did they say why ?

Are you still trading as self employed, just making a 0 or minus figure ?

I think there is a rule somewhere about 3 years of WFTC and Self Employment with no income... I'll look it up.

For Working Tax Credit, your earnings are the taxable profits you made from self employment in a year. This is the figure used on your tax return to work out how much tax you have to pay. This means that the Tax Credits office will usually use your self assessment tax return to work out how much Tax Credits you should get. If you have not completed your tax return, you can provide an estimate of your profits.

So they use your self assessment numbers? You're still filing Self Assessment tax returns etc ?

[Amethyst]

Ahhh there's some information here about why they might have changed your status ...

For claims from 6 April 2015 onwards, claimants must be either employed or self-employed. For tax credit purposes, HMRC define self-employed as meaning the self-employed activity is done on a commercial basis with a view to realising a profit and it must be organised and regular.

HMRC have applied this test to new claims from 6 April 2015 and also check existing claims to see if those claimants also meet the new test. HMRC wrote out to existing claimants about the new test from July/August 2015 before they started to apply these rules to existing claims.

As a general rule, HMRC accept that a self-employed activity meets the test where income from that activity is at least the equivalent of the national minimum wage. HMRC have clarified that claims are checked against the test if the claimant's previous year income from self-employment is less than the number of working hours declared by the claimant x standard rate of national minimum wage.

Notably, this means for example that where a claimant says they normally work say 25 hours a week even if they are only required to work 16 hours a week to qualify for working tax credits, they may be selected for a check if their earnings fall below the threshold based on the hours they declare. (You can find the national minimum wage rates in our national minimum wage section). If they are not earning that amount, then HMRC may ask the claimant to provide evidence that they meet the requirements of the new test. The evidence asked for may include things such as business plans and other business records, including any relevant insurance documents (see HMRC’s Helpcard – note that this helpcard has not been updated in recent years but it can still prove a helpful guide.) It is expected that not everyone whose earnings fall below the threshold will necessarily be asked to prove their self-employment is commercial with a view to realising a profit and is organised and regular.

and LOTS more info here -> https://revenuebenefits.org.uk/tax-c...self-employed/

Did they ever ask you for the additional evidence ?

[des8]

It seems that an overpayment occurred (not unusual) and you disputed the matter with the issuing office.

However this seems to have been an official error (Official error regulations https://revenuebenefits.org.uk/pdf/2...2_original.pdf) and requests for official error reviews (this is different to a dispute or an appeal) should be sent to -

HMRC
Tax Credits Office
BX9 1ER.

[ash3011]

Hi Amethyst.

As I said in my original post, they did ask me for additional evidence, or rather in October 2016 I had a letter asking for information to check my eligibility for tax credits. I sent them the information (the same information I'd always been sending them) and they decided I wasn’t entitled to tax credits.

My contention is that since my circumstances and the information HAD NOT CHANGED, and I had consistently sent in accurate self-assessments, if they decided, at that point, I wasn't eligible for tax credits, then I NEVER was eligible, and the error was made on their part in giving them to me.

[ash3011]

Sorry DES8. I hadn't caught your post when I added my last response to Amethyst. You think this is an official error then (after reading what I added above)?

[des8]

Yes, if they came to a different conclusion following submission of identical information,IMO it is difficult to see how it could be anything other than an official error.
Also there are strict time limits for raising disputes, appeals and mandatory reconsiderations, so claiming official error is possibly the only way forward.


Their responsibilities include :" accurately record and use the information you give us when you make or renew your claim, to work out your tax credits and pay you the correct amount "(COP 26)
It appears from the information you have posted they failed and do not seem to have provided any explanation for calculating your entitlement incorrectly.
That would be official error.

I would construct a letter to send to the address (post 7 above) and copy in the department you have to write to by Friday!

Also note that while all this is going on they will most possibly continue with action to obtain repayment!

[ash3011]

Thanks for that Des. Letter now written and sent.

I suspect they're going to say that I gave them new and different information (unfortunately I no longer have a copy of it) but I know it was consistent with my original submission and with the information I sent in my tax returns.

I await their response...

[ash3011]

Hi People.

The response I got from HMRC was, in my opinion, quite high-handed, inflexible and extremely unhelpful.

It stated that they had previously told me they had looked at the reason for the overpayment and would only look at their decision again if I had new information to give them or if I felt they hadn’t considered previous information that was provided. And since my letter didn't fall into either of the above it meant they couldn’t review or change their earlier decision.

I find it quite inadequate as a response really. When the credits were stopped I was told it was because the information I had given them in October 2016 didn’t show that I was ‘in a trade, profession or vocation that is regular and organised’ or that I was ‘in a trade, profession or vocation which is carried out with a view to a profit’. But as I keep saying, my information and circumstances had not changed since I became self-employed in 2013.

What I want to know is on what basis they decided to give me Working Tax Credits in the first place. How was THAT decision made? How do I get them to give me that information? To tell me their ‘calculations’ (as Amethyst called them)?

In the meantime the job of recouping the payments has been passed on to a debt collection service who have sent me several letters and now a final demand.

I’m still having no luck getting to see anyone at Citizens Advice so any help with what I should do now would be greatly appreciated.

Thank you.

[Amethyst]

I wonder if a SAR data request would help at all. I have no idea what they send but in theory it should be everything they hold about you as an individual so should contain the calculations and decision making as it directly concerns you?

Is the collection company LCS or Advantis ?

[ash3011]

Thanks for your reply Amethyst and for your suggestion.

The collection company is LCS. Did you ask that for a particular reason?

[des8]

I wonder if a SAR data request would help at all. I have no idea what they send but in theory it should be everything they hold about you as an individual so should contain the calculations and decision making as it directly concerns you?

Is the collection company LCS or Advantis ?

When I dealt with my daughter's overpayment a few years back the SAR produced mountains of paper (2 very large manilla envelopes) .
Took a lot of effort to decipher the codes but eventually were able to show it was official error as HMRC had all the info.

If they still refuse to concede after examining the paperwork I think the way forward is a complaint via your MP to the Parliamentary and Health Service Ombudsman.
The only other avenue would be a judicial review