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repayment of Working Tax Credits.

(12 Posts)
Busybusybust Thu 08-Nov-12 20:38:16

Hi, I'm really worried. I have received a letter from Inland Revenue, telling me that they will change my tax code to get back over-payment of Tax Credits dating back to either 1999 or 2000 - I can't remember.

I don't think they can claim this back now. I've Googled and come up with DMBM595080 Section 37(2). Am I right? If so, how do I stop them from changing my Tax code?

I am coming up to retirement age and am not paid much, so really, really need all the savings I can put together.

Can anyone help please?

RedHelenB Fri 09-Nov-12 12:20:07

Did you know before now that you had been overpayed tax credits?

Busybusybust Fri 09-Nov-12 15:48:38

Yes, I have known for years, but have never acknowledged the overpayment claim.

It arose from a misunderstanding over which year I had to give details for and then having to tell them about changed circumstances. They have written to me several times over the years, which I have not acknowledged.

It seems clear to me that if they haven't taken me to court in the first 6 years, they have no claim on the money now..............or am I missing something?

prh47bridge Fri 09-Nov-12 19:52:30

You have misunderstood DMBM595080.

It refers to Section 37(2) of the Limitation Act. Normally action for recovery of debts must start within 6 years of the debt becoming payable. However, section 37(2) says that this time limit does not apply to recovering tax, duty or interest on tax or duty. So yes, they can claim this back.

sicutlilium Fri 09-Nov-12 20:16:47

prh47 is that how one should read
"Other debts that are not tax, for example...
tax credit overpayments...
are subject to the Limitation Act, and action must be taken within six years “from the date on which the cause of action accrued”."?
That looks to me like tax credit overpayments are not "tax duty or interest on tax or duty"
But I'm not a lawyer, just confused.

prh47bridge Fri 09-Nov-12 20:44:56

Sorry - my fault for getting distracted whilst responding. blush

Tax credits overpayments are not tax so are subject to the Limitation Act. So they can take court action to reclaim tax from 2000 but not tax credits.

However, the Limitation Act is only relevant if HMRC want to take legal action. They are not doing so in this case. They are reclaiming the money by changing the OP's tax code.

Does this relate to the Children's Tax Credit which used to be a change to your tax code which reduced your liability to tax if you had children?

We had an issue with this in 2001-2 when dh was given the wrong tax code when he applied for the Children's Tax Credit which meant he'd been underpaid tax. we successfully appealed on the grounds that it was not reasonable for him to know that he had the wrong tax code.

I'm very surprised that HMRC can reclaim money 12 years after the event - I thought normally they had 5 years after the end of the relevant tax year unless fraud was suspected? It might be worth posting in the Money section to get advice from people there.

sicutlilium Fri 09-Nov-12 20:58:17

Makes sense. So could the OP challenge the change of tax code? And if she could, would whatever mechanism she could use cost her more to use it than the amount HMRC is seeking to recover...?

We initially phoned the tax office who told us how to appeal. Given the very long time it's taken for HMRC to try and reclaim this money I'd also be inclined to contact my MP.

Sorry, meant to say that it didn't cost anything to appeal, we just wrote a letter.

Busybusybust Sun 11-Nov-12 10:40:39

Thanks for the replies. It says in the letter that they can do this under Section 29(5) of the Tax Credits Act 2002. It have had a look at this, and I can't see where it supersedes the 1980 Statutes of Limitation Act.

But if I'm right, then HMRC are 'trying it on'. This seems unlikely. Do they do this?

prh47bridge Sun 11-Nov-12 13:07:22

To repeat what I said upthread, the Limitation Act only applies if they are taking legal action against you. They are not doing so therefore the Limitation Act is irrelevant.

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