Tax Credits Overpayments

[billypre]

Howdy all


Can Child and/or Working Tax Credits be statute barred ? Seems a bit iffy. I seem to remember that the DWP CAN be statute barred but unsure if it goes with tax credits.

I'm in Scotland

[garlok]

Re: Tax Credits Overpayments

Howdy all


Can Child and/or Working Tax Credits be statute barred ? Seems a bit iffy. I seem to remember that the DWP CAN be statute barred but unsure if it goes with tax credits.

I'm in Scotland

The position always was that debt to the government, in this case HMRC for tax credits, can never be statute barred.

regards
G

[Deepie]

Re: Tax Credits Overpayments

Well I think they can.....

But they can always be deducted from future benefits.

[garlok]

Re: Tax Credits Overpayments

Well I think they can.....

But they can always be deducted from future benefits.

It seems you may be right Deepie. I have just taken a look around the current HMRC manuals. However when I first started out my own ( a long time ago now) it was always a rule of thumb by accountants that debts owed to government departments would never be Statute barred.

Does this not also fall into the infamous Commissioners of Inland Revenue v Fry in CoA case as well somewhere along the line. Another of those cases used by creditors in order to stave off F & Fs throught their own negligence?

regards
G

[SXGuy]

Re: Tax Credits Overpayments

HMRC have rights to go back X number of years and recoup any monies given in error, usually through deductions on future payments.

Its only tax due outside PAYE where you have some hold over repayment, and usually, we say tuff if its been over 6 years, and usually they accept this and walk.

[billypre]

Re: Tax Credits Overpayments

So are we a yay or a nay ? lol


If they can take back off future benefits can they take back off of different benefits. i.e you have wtc or ctc debt and they take it from future housing benefit or others ?

[SXGuy]

Re: Tax Credits Overpayments

Methods of recovery

As explained above, HMRC may recover overpayments under the TCA 2002, Section 29(3) to (5), in one of three ways:

• by deduction from any tax credit award made to the claimants (referred to as ‘ongoing’ recovery which can only take place if the same claim on which the overpayment occurred is still in payment);
• by direct recovery; or
• through amending the PAYE tax code.

It should be noted that claimants do not have a choice between ‘ongoing’ and ‘direct’ recovery. The recovery method used is determined by the circumstances of the overpayment.
If the claim on which the overpayment occurred is still in payment, ongoing recovery will be used by the Tax Credit Office. If that claim has ended, or if the claim is a ‘nil’ award (entitlement exists but no payments are due as income is too high) then HMRC will send the debt to their Debt Management and Banking arm for collection by direct recovery. This is the case even if a claim ends and then re-starts for some reason (e.g. a claimant splits with their partner, makes a single claim and gets back together making a new joint claim – the overpayment from the original joint claim cannot be recovered from the new joint claim). It is worth noting that HMRC announced in the Autumn 2012 statement that they would be introducing new IT to allow ‘cross claim’ recovery whereby overpayments on a claim that has ended can be recovered from a future new claim even if it is made in a different capacity (for example an overpayment from an old single claim will be recovered against a new claim as a couple). It is expected that this will commence in April 2014.
HMRC have published a guide for intermediaries online which explains how HMRC handle tax credit overpayments, including their direct recovery policies.

http://www.revenuebenefits.org.uk/ta...ing-with-debt/

[SXGuy]

Re: Tax Credits Overpayments

So it seems at the moment, no they cant, but from April 14, yes they can.

Hope that answers your question billypre

[billypre]

Re: Tax Credits Overpayments

Thanks. Interesting stuff. My wife got a letter from them for an overpayment she had with her ex partner from 2005/6 and 2006/7.

So, going by above it would appear to be statute barred and they couldn't recover from her new award which is a new joint claim with myself.

I am also assuming the new 2014 rule won't be retro-active in this case ?

[SXGuy]

Re: Tax Credits Overpayments

I cant imagine it would be retrospective no, thats not to say they may not try it on though!