This means that you agree with the Tax Credit Office that you have been overpaid. However this does not necessarily mean that you have to pay the overpayment back. You need to ask yourself the question: whose fault is the overpayment?
- The overpayment may be nobody’s fault. The obvious example is if your income has gone up. You’ve done nothing wrong, but, on the other hand, the Tax Credit Office cannot be blamed for not knowing about the change. In these circumstances to have to repay the overpayment (sorry).
- If the overpayment is clearly your fault (for example, your childcare costs went down but you didn’t tell them) you will have to repay it.
- The overpayment may be their fault: for example, you told them your childcare costs have gone down but they don’t act on this. The big problem with this is that it’s often your word against theirs (which is why keeping records is so important). How they decide in detail whether something is their fault or not is spelled out in their code of practice, which is available on their website as the COP26, which can be found at www.hmrc.gov.uk/leaflets/cop26.pdf.
important special case involves people who were a couple but
separate, or were separate but become a couple. Often this happens
when a woman is responsible for children, and so entitled to Child
Tax Credit, and a partner either leaves or joins her. The law says
that as soon as her partner leaves, for example, the couple award
should end and she should make a new claim for Child Tax Credit as
a single person. If she doesn’t the Tax Credit Office will end her
couple claim when they do find out, and ask for the money paid in
The crucial thing here is that very often she would have been entitled to just the same amount of Child Tax Credit as a single person as she was a couple (and sometimes more). The government hasn’t therefore actually lost out: there isn’t in any real sense an overpayment at all. The Tax Credit Office’s code of practice says that in these circumstances, they frequently have to reduce the overpayment by the most of the amount of tax credits she should have got as a single person.
The same applies if a single person is joined by a partner (although in those circumstances it is more likely that the amounts don’t balance (the partner may be working, for instance).
The Tax Credit Office will not normally consider doing this unless you ask them.
If you think any of these things apply there is no point in appealing, as none of their decisions are actually wrong.
However, if you think the overpayment is the fault of the Tax Credit Office, not you, you have the right to complain. The procedure should be as follows:
- You write to the Tax Credit Office making clear in the letter that you are making a formal complaint, and explaining why you think the overpayment is their fault;
- If they do not agree with you, you have the right to write to them again, asking to make a ‘2nd Tier’ complaint.
- If they still do not accept your arguments, you have the right to ask an independent organisation called the Office of the Adjudicator to look at the matter.
- If the Adjudicator does not accept your arguments, this is probably the end of the road, although you do still have the right to ask your MP to refer the matter to the Parliamentary Ombudsman.
In practice this process can be incredibly slow and frustrating. The Tax Credit Office may not always acknowledge your letters so you may have to write additional letters chasing them. If they persist in not progressing your complaint write to the Adjudicator anyway, as (in my experience) this often prompts them into action.
In the meantime the Tax Credit Office’s debt collecting office may well ask you to pay the money back: you should write to them saying the overpayment is in dispute and ask for the matter to be put on hold until this is resolved.