Tax credits stopped and asked to pay back for 2 years

[Hopingtobehappy]

I dont know whether this is in the right place.

I am separated from H and have been for 18 months.

We run a business together still, address for the business is where I live.

Tax credits 'investigated' my single claim and they have written to us now sayingthat they have closed the claim and that I have to pay back £10K

I have not been given any chance to prove that H does not live here, they say that they have checked and that there are numerous 'association' with my address and that is sufficient doubt over my single claim.

Of course there are numerous associations! we run a business together! we have 2 joint mortgages and we have 2 children! what do they expect?

I am in a bit of a mess as payments have stopped altogether. Even when we were a couple we still had a claim jointly and even that minimum amount would have helped.

[IneedAsockamnesty]

That's actually not the case at all.

Being part of a couple is not defined purely due to financial behaviour. And tax credits claiment compliance own rules only have about 20% of the "in a couple or not" evidence/ questions as financially related behaviours the other 80% is none financial.

[Flibbertyjibbet]

But surely it depends on what the questions are in that 20%?

Like, 'do you have separate bank accounts'..

[IneedAsockamnesty]

No they are relating to devision of the particular claimants household bills and responsibility for those bills but any maintainance payments are expressly protected from consideration even if its provided by paying bills as opposed to handing money over.

[Hopingtobehappy]

Surely if they have a list of questions to define whether you are a 'couple' or not, then they should ask them? I have never been asked any questions at all.

[Hopingtobehappy]

From their website:

'If you're married or in a civil partnership your joint claim ends when you have legally separated or your separation is likely to be permanent'

[Hopingtobehappy]

Flibberty I was asked the question as to whether the money was paid into a joint account and I told them it was.

Sock I cant find the questionnaire, do you have a link?

[Hopingtobehappy]

Found this:

www.hmrc.gov.uk/manuals/tctmanual/TCTM09320.htm

Which makes no definition of being a couple for financial reasons.

[LisaMed]

You have a joint account into which money is paid for both of you and both of you draw from. You have joint mortgages. You have a joint business. You have children and presumably work together to raise them. You seem very entangled. You deal with things together amicably.

Have you considered going to Relate and reconciling? If it is possible it sounds like it would solve a lot of problems.

[skyebluesapphire]

I was investigated just before Xmas for making a single claim when they believed that my XH was still with me. I made a single claim on 8 April 2012. They investigated me for 5 April 2012 which had always been a joint claim anyway!

At the time we were divorced, but still had a joint mortgage as these things take time to sort out and my remortgage was going through.

I sent copies of texts, the decree absolute, my council tax bill and other things as proof that he did not live here.

I understand that some of your things, like mortgages etc will take time to sort out, but you do need to be sorting out everything else. Get your own bank account, pay your own bills, get all bills in your own name etc. It has to be done sooner or later, so do it now.

[Viviennemary]

If you are still linked financially and jointly own two properties then I think it is right you should be paying back the money. It doesn't sound to me that with jointly owned houses and other joint finances and you aren't even divorced they are right in saying that you were not entitled to the money in the first place.

[Viviennemary]

And just to add if your name is on two title deeds then you are tecnically the owner of two properties.

[FatimaLovesBread]

Could the reason you're no longer entitled, even as a joint claim, is because the tax credit earning threshold has changed and is now lower?

[IneedAsockamnesty]

Some of the questions cannot be published under FOI but most are in the link I gave you before.

Its stuff like do you socialise as a couple, do your friends and neighbours perceive you as still being a couple, do your children know you are not together as a couple,do you go on holidays together for any other reason than child contact.
Do you cook him meals on a regular basis other than if he is sharing a meal with the children for contact purposes, do you or would you do his housework, does he fund anything in your home other than anything he is obliged to do due to maintenance obligations or court orders or you in his.

Do you introduce yourself to anybody as a couple and is it likely that your friends or family would feel that you are still a couple and invite to to attend functions as a couple.

Have you informed any third parties such as schools or docters ect that you are no longer a couple,do you have any agreements in place formal or otherwise that show when each adult is responsible for the care of the children ( contact) or is everything done on a ad hoc basis.

[Hopingtobehappy]

LisaMed

Not going into detail on a thread about Tax Credits (which also seems to be about my mortgage as well, fascinating!), but we will not get back together, our relationship is most definitely over. Lots of people can split amicably, when children are involved its the only thing you should be doing in my opinion, unless you are very selfish.

Thanks sock I managed to find a few things after I asked you that.

Going by what they say on their website, and from what you have said above, we are not classed as a 'couple'.

I will ask my accountant to get copies of phone calls that I have had with them as well, where they told me that I needed to make a single claim.

[Groovee]

I'd ask your accountant to put in an appeal. We did this and got the money backdated.

[flatmum]

But surely going forward none of this will make much difference as there declared joint income is 35k which is now too much to get much in te way of tax credits? And that is declared income from someone that is self employed. Are you sure he is not earning more from the business OP and not declaring it which has set HMRC into you? It does seem a very low income to sustain 2 mortgages, 2 kids and an accountant.

It is a very common scam/loophole (depending on your point of view) to make out like you are on a very low income but receive more funds from a business in the form of tax dividends. For example I know a couple who earn well into 6 figures from his business but he pays the wife 7k (to take advantage of her ya allowance) and himself a salary of 10k so they can claim full tax credits. Their children go to private school. Not saying this is what you are doin but HMRC are aware I think that a lot of people are and are attempting (rightly IMO) to stop it. You may be a victim of this.

[Hopingtobehappy]

No if only that were true flatmum :-)

We used to earn almost double that but things not going so great at the moment. Next years projected is less than that if nothing changes.

Going forward of course it will make a difference as we are NOT a couple.

(we dont sustain an accountant LOL!)

[Hopingtobehappy]

With regards to the loophoel that you are suggesting above, are you sure about that, because you still have to pay tax on dividends and they are classed as income for CTC as far as I know.

If it is true and they are able to claim tax credits, do you not agree that they should be the sort of people that are being targetted to stop? because a lot on this thread seem to be rubbing their hands in glee that mine have been taken away, dispite those same people saying that £35K (between me and ex) is a low wage! and forgetting altogether that I only earn £10K!!

[RedHelenB]

Did the letter come out the blue or were you asked to send some info in first OP? It does sound very confusing but I think you need to take back control from your accountant & find out how you appeal. BUT, I really would now have separate bank accounts & your ex paying across 20% of his income as maintenance minus the overnight stipulation (look on CSA website for figures) He can pay you more of course but that's the minimum!

[Hopingtobehappy]

No we didnt get as far as a letter asking for anything, they say they sent one but it was never recieved from either me or my accountant.

I will have to sort out the bank next week, its going to be a nightmare as there is so much coming out of the account, but I may be able to just get it put into my name as H doesnt use it anyway, I do everything with the money.

Surely maintenance agreements are between couples? I thought that the 20% was just if you go through the CSA (def no intention of doing that, I have heard more horror stories about them than I have about HMRC) not that it matters, as he pays more than that anyway.

[flatmum]

I definitely agree they should be targeted first and I feel really sorry you are going through this (where is exH? Is he shouldering some of tej stress?)

However, I don't see that you should have got tax credits when your joint income was 70K (if you did?) and I don't think your income is 10K as it stands, your joint income as a family is 35K. I can see why HMRC think that. I also think it is possibly a bit naive to think you can run a business and, when times are tough, expect to be able to fund (or part fund) a second mortgage to save yourself rent. I know that sounds harsh and it is a shame that you are being targeted when you did it for the best of reasons (your family) but I think that, given the current economic and political climate in this country you maybe need to somehow work out how to survive without the tax credits as your 10k wage comes from your joint business which is not eligible for much tax credit anymore (how will this change next year if projected turnover is lower? Could you reapply then?)

Can you jointly see the accountant and ask them to review the whole financial picture and see what can be done?

[EggwiniasRevenge]

I think that you have done the correct thing with regards tax credit. They have advised you exactly what they advised me. Claim as singke from tge date the relationship broke down.

You see yourself as separate.

It sounds as though the hmrc see evidence which suggests you are not seperated (can you see why it looks like a fraudulent claim to them? This is why they started an investigation). It sounds as though they think they have asked you for evidence to prove otherwise which they haven't recieved (because you didn't recieve the request? )

This is the first part of the problem. This is where you should focus imo. I would suggest finding out what correspondence they have sent, asking for what info. Persue the lines that you have never recieved this and therefore have never had the opportunity to respond.

Unless you sort at the above it's irrelevant whether you are or aren't a coupke in your eyes/there eyes etc. Debating that isn't going to move you forward until you negotiate with them to allow you to provide evidence.

Then you can decide what evidence you need and what is valid or not.

Fwiw it is still possible to have a joint financial interest in the business and investments. The house would count as an investment. Your day to day finances should be seperate. The paying of bills. Business bills can come out of a business account. Mortgages and house maintenance things can come out of a joint account but imo the weekly overheads (utilities etc.) Should come out of a single account in the name of the resident that lives there.

I think you need to work out what finances need to be joint and what don't. It is highly unlikely that they all need to remain joint.

I think it is also worth pointing out that whilst you may have been eligible to make a legitimate claim as a single at this point in time hmrc believe it was a fraudulent claim as an individual. As a result they will treat it as fraud and if that is the case you will be entitled to nothing. I don't think they will convert it to a joint claim retrospectively just to avoid fraud. You need to convince them it is not fraud. If you can't do that then there is no route forward.

Disclaimer: I am not saying it is fraud. I am saying that is what the hmrc see based on the information they have.
I am also saying you need to do xyz but obviously that is what someone needs to do be that you or your accountant.

[RedHelenB]

So to get things straight in my head, all the money you earn from the business goes into the joint account & then you pay the bills on both houses, council tax etc out of this one account that WTC go into as well?

[IneedAsockamnesty]

Fraud is a criminal act should the op be inclined to do so she can force them to deal with it as a criminal act rather than them assuming Based on a balance of probability.

Unfortunately these days they tend to rely on things that previously would have been used to start an investigation as complete evidence rather than having info and finding out more.

There are several clauses within the financial related questions to allow for different circumstances to be taken into account but due to a reduction in manpower they don't appear to have done anything other than the standard computer checks followed by instant decision.

They should at the first point of contact by the compliance team asked you to provide an entire years worth of bank statements along with utilities bills and any further evidence to demonstrate you are single. There is not a chance that that letter was not sent to you.

Chances are you have ignored or forgotten about it.

It sounds like they have decided you are a two house owning family but are all living together as a family.

The only way you can solve this is by doing it yourself alongside someone who is qualified to deal with it using the appeals process. Your accountant will not be that person and chances are it is their actions that have made the situation worse.

Your ex and you can agree on what ever maintenance amount you wish no matter what that figure is and 20% is not the minimum he has to pay its the maximum the csa would make him pay if you chose to use them.you are perfectly entitled to either disadvantage yourself or try for a huge advantage with a private agreement but to have that income disallowed from your tax credits assessment you need it documented that it is maintenance.

BUT just from a being sensible perspective you should think about dismantling your private joint accounts. The two of you are not a couple you should not be equally liable for any poor financial choices that are made in the future and the current financial situation clearly does not work well for you as it has led to you now having to jump through hoops to prove you are not part of a couple and the loss of your income.

[EggwiniasRevenge]

I'm not sure.

I'm not sure I'm clear on how the business is linked to the mortgage. Are there any business related costs associated with the property. Does the business use utilities at the address or is it just a registered address (for eg my ex was a driving instructor. He worked from 'home' but there was no real cost of the business in the bills we recieved as the only utilities he used was a bit of electricity to power the laptop to keep his records. On the other hand mil ran an ironing company so used a lot of electricity to run the presses).