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 Why do I have to pay back Tax credits
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blinkinink
Rank; Hector Tax Inspector


1 Posts

Posted - 12/01/2010 :  23:06:25  Show Profile Send blinkinink a Private Message
I recently received a demand for 3600 for overpayment of Tax credits.
I have asked why has this happened because I have always given all the correct info.
They say it is because I had a pay rise every year for 3 consecutive years. They say that because the pay rise was in January of each year then any entitlement for the complete year (April-April) is squashed.
In summary I was not entitled to ANY the benefit because of the January wage rises, there is no pro rata payments. if the pay rise had been in April I would have been OK
This doesnt seem fair or correct.
Any advice ?

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Ali M-W
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3558 Posts

Posted - 13/01/2010 :  07:17:27  Show Profile Send Ali M-W a Private Message
I have to say, how HMRC calculates annual entitlement based on a claimant's salary and the rules under which they do it is entirely a mystery to me. I do know, however, that HMRC should provide a proper explanation for how any overpayment has arisen, although it is up to the claimant to ask for this, and is rarely if ever given spontaneously.

If I were you, I would question HMRC about these overpayments. Again, there is the complex issue of the "disregard" which HMRC is supposed to apply, which ought to allow a claimant to see a modest pay rise - or more recently a somewhat more substantial one - before they end up owing back an overpaid tax credit. Can I get my head around how that works? No! But members like Samthe, MissFroy and Splashin can, and no doubt they will be along soon.

I would always start by seeking an HMRC explanation you can actually undertand. Mine took about three years to come to me, since HMRC attributed my overpayment(s) to all manner of things, including some clearly false assumptions such as my apparently earning zero one year for a 37 hour week, and then all of a sudden raking in over 40,000! It took three years to go through umpteen versions of what HMRC speculated to have happened, before the nincompoops finally decided it all ought to be written off. So, in a nutshell, you always need to have a clear picture of what went wrong before deciding whose fault that may have been, and whether it needs to be written off or whether it must be repaid. To date, overwhelmingly from the cases we have seen and heard about, it is not the claimant's fault, and a claimant who sticks rigidly to their guns has - in my experience to date - yet to be forced to repay, either still being in dispute with stages still to go, or having a successful write-off outcome. Capitulation is the only defeat I have seen, eg. people saying "I can't be bothered any more and have offered them 10 a month till the tenth of never, or until I pop my clogs." Although we seem to be a feisty lot here, and that is rare!

HMRC will try to pin the blame on you. They'll probably say that you should have contacted them the moment you got a pay rise. Perhaps you did? Perhaps you didn't? It's really immaterial. Some things we are obliged to do without needing to be told, eg. tell HMRC the truth. But we can't be expected to recognise, unprompted, every situation where HMRC might want to know something. My guess is that at each stage in your claim, you probably did all that any reasonable person would do. Ignoring requests from HMRC isn't usually a great idea, but few people actually do do that, and if they do, there is usually a very good reason (sent to wrong address, intercepted, learning disability, bereavement, change of address, ill health, etc.)

I'm running on ahead, though! Go to You must be logged in to see this link. and follow the dispute steps there. Let's at least know what you are dealing with before you decide whether to fight or cough up. Get HMRC to explain what's happened. Get a Data request submitted, so you can see the footprints of your claim journey, if you like, and know what you and HMRC have done. You can always ask questions here. This tends to be a DIY job because of the massive amount of people affected and the handful of us running this joint in our spare time, but there is always a bit more help there for those utterly bemused, terrified or in vulnerable circumstances. Good luck, and may the Force be with you!!!!

Morpheus: I'm trying to free your mind, Neo. But I can only show you the door. You're the one that has to walk through it.
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