Tax Credit Overpayment

Hi

Just looking for some clarification on what to do. Firstly, I have very little experience in tax credits especially tax credit overpayments (its not something we’ve had to deal with at our charity).

Client has received a letter stating a tax credit overpayment needs to be paid back - when the client first came in she was dealt with by my colleague so unsure of exact years (I know from a while ago!) and we rang up HMRC to get a written statement of reasons for the overpayment.

She wants to appeal and/or dispute the overpayment (seems like she told HMRC of change of circs which they never actioned) so I’ve been doing some “reading up” on the process.

Slightly confused as to which form that I need to use - WTC/AP was advised, however that states I need to fill in the TC846 form? As ever, the HMRC system takes me in circles as client doesn’t have Government Gateway ID nor can we seem to get one for her.

Which form do I complete? Preferably paper-version.

Thanks

Adam

The WTC/AP form is for requesting mandatory reconsideration - i.e. to say that you do not owe the money because you have not actually been overpaid or that any overpayment is not legally recoverable from you. As tax credits overpayments are always recoverable, it would be the former. So the basis for an MR might be that HMRC say you are living with a partner and you do not accept this, or the overpayment has been miscalculated because you are entitled to an element which has not been included.

The TC846 is to politely ask HMRC not to recover the money -i.e. whilst you owe the money legally, please could HMRC write it off in the exercise of their discretion. A possible basis for this request might be that the overpayment came about due to HMRC’s mistakes and inefficiencies. Unlike the revision process, this is entirely discretionary so if HMRC decide to recover the overpayment anyway, there is no right of onward appeal.

Whilst there could be an appeal argument in your case (don’t know enough about it), it sounds like your client’s main complaint is that the overpayment arose because HMRC delayed in actioning a change which would have reduced her entitlement. If that is the case, it is the sort of argument which would need to be made in the context of discretionary write-off because it makes no difference to the validity of the overpayment.

Elliot Kent - 02 January 2021 09:23 AM

The WTC/AP form is for requesting mandatory reconsideration - i.e. to say that you do not owe the money because you have not actually been overpaid or that any overpayment is not legally recoverable from you. As tax credits overpayments are always recoverable, it would be the former. So the basis for an MR might be that HMRC say you are living with a partner and you do not accept this, or the overpayment has been miscalculated because you are entitled to an element which has not been included.

The TC846 is to politely ask HMRC not to recover the money -i.e. whilst you owe the money legally, please could HMRC write it off in the exercise of their discretion. A possible basis for this request might be that the overpayment came about due to HMRC’s mistakes and inefficiencies. Unlike the revision process, this is entirely discretionary so if HMRC decide to recover the overpayment anyway, there is no right of onward appeal.

Whilst there could be an appeal argument in your case (don’t know enough about it), it sounds like your client’s main complaint is that the overpayment arose because HMRC delayed in actioning a change which would have reduced her entitlement. If that is the case, it is the sort of argument which would need to be made in the context of discretionary write-off because it makes no difference to the validity of the overpayment.

Thank you!!! That helps alot