tax credit overpayment - appeal and/or dispute?

[Toadpig]

I hope someone can help with a little advice.

After submitting my renewal pack for working tax credits last May I heard nothing from them for over six months. Even the helpline couldn't tell me what was going on. In December I received a letter from the compliance team and sent the paperwork they asked for. Last week I was informed that for 2010-11 they think I was not in 'qualifying remunerative work' despite the fact I worked at least 30 hours every week and made a profit. They aren't disputing the number of hours I work just the amount of money I'm making. I'm self employed.

They say I will have to pay back tax credits for 2010-11 and what I have already been paid for 2011-12. I haven't received an official letter about 2010-11 yet but I received one telling me I would have to pay back credits received in 2011-12 and that I would receive a letter about how to pay soon. I have sent an appeal letter to the compliance team today as I disagree with their decision but wondered if and when I should send in a dispute letter. If they think I was not in 'qualifying remunerative work' then that was their mistake as I always sent them the correct information. Not to mention the fact I was overpaid in 2011-12 is purely down to their delay in processing my paperwork.

Should I wait for an official letter about 2010-11's payments? As I have started an appeal they should stop asking me for repayment. Can I still send in a dispute if they have stopped asking for money back?

[PeteD]

Re: tax credit overpayment - appeal and/or dispute?

Quite interested in what's going on here because it's exactly the same as they've done to me and I'm wondering if it's actually allowed.

I got a letter from the compliance office at the end of October, sent off my paperwork and received a reply last weekend saying they didn't believe I was working enough hours (I'm a computer games programmer and as such a lot of the work is research and work that doesn't produce "items" for sale, I was never told this was a problem when I was advised to go self employed). So now I'm in the situation that they want back nearly 2 years of tax credit payments. Even the people at the tax credit office said they thought it was wrong to go back to 2010, surely if they thought there was a problem they should've told me back then or maybe just stopped the payments from the decision date??

Any advice on the best course of action would be much appreciated. I think I'll start with a call to the CAB..

[Toadpig]

Re: tax credit overpayment - appeal and/or dispute?

Hi Pete,

I'm sorry you're in the same position. It is very frustrating, not to mention scary. I sent off my appeal letter a couple of weeks ago and checked that it arrived so I know the wheels are in motion. Now I will wait to see how the appeal goes before sending in the dispute letter. Not sure if it's the right way to do it though.

You may have seen this already but someone gave me this link on another post and it's got lots on onfo on disputes: http://www.taxcc.org/Dispute_1st_things_1st.html

Good luck with your case.

[labman]

Re: tax credit overpayment - appeal and/or dispute?

It's a very controversial issue at present when the mistake was made by the DWP after being supplied with the correct information.

My understanding is that currently they are allowed to do this. The sitaution with the DWP is, in my opinion, ridiculous,in that they can and do act as judge and jury, and help themselves to your money at any time and at a level they initially dictate.

I would fight this tooth and claw. The DWP can be defeated. I've just done it, but it took 9 years! Do not accept anything they say, plough through the internet for internal memos about things - there's loads on there, but it is a massively time consuming task. You are likely to find a few bits and pieces which are insignificant in themselves, but when put together start to form a picture of errors, failure to observe their own procedures etc.. which all serve to strengthen your case.

Ensure that you make sufficient fuss to ensure they do not take the money. In my case they delayed it for a certain number of days each time and this kept on and on and on. Eventually they never took one penny.

Good luck!

[Toadpig]

Re: tax credit overpayment - appeal and/or dispute?

Thanks for the advice, labman, and congratulations on your win. It's HMRC that deals with tax credits rather than DWP so the system might be a bit different. Still, I'm using the internet as much as I can to find out information. There is evidence that if an individual has done everything in their power to make sure the HMRC has the information they need then the individual doesn't have to pay back any overpayment. However, the number of people succeeding in their appeals and disputes seem to be quite low. It is worrying. I don't have any choice other than to fight it though so I'l just keep on keeping on. :tinysmile_grin_t:

[bluebottle]

Re: tax credit overpayment - appeal and/or dispute?

Hi Toadpig,

As I think we all know, HMRC are getting just as bad as Capita, a private sector firm, and are in the running for "Cock-Up Kings" title for 2011-2012.

Have you submitted your Self-Assessment Tax Returns for the periods mentioned and are HMRC basing their calculations on what you have stated in the returns?

I would certainly appeal against HMRC's decisions. As you say, they have cocked-up, not you. And I would certainly keep on top of the matter and not give them any room to manouevre. The adage, "Give them an inch and they'll take a mile" is certainly true where HMRC's Personal Taxation Division is concerned. My experience of HMRC is that as long as you're straight with them, they'll be straight with you. And you have been straight with them as your post shows.

One observation I would make is that if they overpaid you in the previous period, what's to stop them adjusting the payments you are receiving in the current period to correct this? It's not rocket science.

If you know or are friendly with an accountant or a tax inspector, ask them what you should do.

Bluebottle

[Toadpig]

Re: tax credit overpayment - appeal and/or dispute?

Hi Bluebottle,

Thanks for your adivce. I had to laugh at the thought of HMRC being the 'Cock-Up Kings'. It seems they have messed up for a HUGE number of people.

Yes, I have submitted self assessment tax returns for the periods they are questioning. However, they are basing their judgement on the information I sent them when they requested it. They did ask for my tax number too so I guess they have cross referenced but who knows.

I have been honest with all my dealings with HMRC. I checked and double checked that I was eligable for tax credits when I first signed up and if I had thought for one moment that I wasn't I would never have applied. What worries me is that HMRC aren't above being dishonest with people. Many cases that I have read about include HMRC telling people they never received information the individual sent. When the individual got hold of their file from HMRC, lo and behold, the information was there all along. That's just plain scary. I was told by the helpline that there have been more checks run this year so is it the case that they are actively looking for people to remove from the tax credits system? When I was first told that I was not in 'qualifying remunerative work' I was told it was because I was not making enough money. I got a letter the other day acknowledging receipt of my appeal letter and was told my work should be primarily commissioned or contracted work. Most of my work is commissioned but I wasn't told that was an issue until that letter. It seems they are moving the goal posts.

As for adjusting the payments from my current tax credits payment, when I was told my 2010-11 claim was rejected they also cancelled my 2011-12 claim so I no longer get WTC. What's more I won't ever apply again. If I have to go cold and hungry I won't claim again - LOL. Part of my issue with HMRC is that it took them seven months to let me know that my previous year's claim was rejected. Which meant seven months of extra payments that I wasn't entitled to but didn't know about. Surely that can't be right?

[charitynjw]

Re: tax credit overpayment - appeal and/or dispute?

It may be worth noting that HMRC are now using the services of DCAs

http://www.hmrc.gov.uk/payinghmrc/debtcollectors/

[Toadpig]

Re: tax credit overpayment - appeal and/or dispute?

Thanks charitynjw but it shouldn't come to that. I am going through the appeal process right now and have been told by HMRC that they won't be chasing the money while that is in progress. I haven't had any demands for money yet either, just informed that I will have to pay it back in the future.

[bluebottle]

Re: tax credit overpayment - appeal and/or dispute?

Hi again Toadpig,

I was self-employed for a while after I retired from the police force and, yes, they can query if it appears your earnings are down. What they do is compare your earnings against other self-employed persons in your field of work and base their figures on an average. I got this information from a life-long friend who was a tax inspector, but now works for HM Courts and Tribunal Service. Saying they haven't received documents is not unusual for HMRC Personal Taxation Division. When you take the number of documents going through the local tax offices, slip-ups are inevitable. I've had it happen to me and my tax affairs are dealt with at Cardiff, not St Austell, in Cornwall, which is the local tax office for the area where I live.

If HMRC have cocked-up, they should put it right. They cocked-up my PAYE tax on a job I've recently had to quit due to ill-health, but, as a result, I received a tax refund of almost £2,000 including interest, as a result.

Be patient with HMRC and let them go through their paperwork that they've got to see if they have, indeed, cocked-up in your case. If they have, it will have been worth the wait, especially if they owe you anything.

Bluebottle

[Toadpig]

Re: tax credit overpayment - appeal and/or dispute?

Thanks Bluebottle. That's good to know. Certainly my income during 2009-10 stalled and in 2010- 11 reduced a little so that might be an issue. I shall be patient and see what they have to say after the appeal. Congratulation on getting your tax refund though. It's good to know the system works for some people :tinysmile_grin_t: