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Historic recovery of old tc debt

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Sunderland West Advice Project

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Apologies if this has been addressed before

Client just had £150 taken direct from earnings ref an old tax credit debt from 8 years ago, and it looks like this will be taken from wage each month from now on.
when overpayment happened 8 yrs ago she rang HMRC to be told not to worry, they would look into it
As she heard nothing since she thought the issue was closed.
Now DWP have debt and are recovering
Too late to appeal
Is anything that can be done here? Its manifestly unjust


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LITRG published an article about this back in October if it’s any help -

Do you have an old tax credit debt?

Looks like your client might need legal advice about whether LImitation Act 1980 could apply?

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Head of Low Incomes Tax Reform Group

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I was going to link you to the article that we wrote - Daphne has beaten me to it!

She should have received a letter about it giving her some time to discuss with HMRC and/or DWP. Did she get that?

As noted in the article, the limitation act seems to stop HMRC taking court action but not recovery by other mechanisms - but i’m not an expert which is why we suggest getting some advice about that.


Benny Fitzpatrick
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Welfare Rights Officer, Southway Housing Trust, Manchester

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If she was not correctly informed about the decision to recover, (ie: HMRC did not follow procedure) can it be legally enforced?

Gareth Morgan
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The Tax Credits Technical Manual says at TCTM08303

Payment of Tax Credits: Overpayments: Recovery of overpaid tax credits
Tax Credits Act 2002 section 29

Where an overpayment is liable to be repaid by a person or persons, the Commissioners for HM Revenue & Customs must give notice to that person or each of them.

The notice must specify

the amount to be repaid; and
how the amount to be repaid is to be recovered.

An overpayment can be repaid to the Commissioners in the following ways:

it can be treated as tax charged in an assessment being due and payable by the person(s) named in the notice within 30 days: Tax Credits Act 2002 Section 29(3)
it can be recovered by deduction from a payment of any tax credit under an award made for any period to the person(s) named in the notice (see TCTM08304): Tax Credits Act 2002 Section 29(4)(a).
it can be recovered as if it was an underpayment of income tax for a previous year of assessment (known as PAYE coding out): Tax Credits Act 2002 Section 29(5)

Where an overpayment of a tax credit is to be treated as though it were an amount recoverable by the Secretary of State under section 71ZB of the Social Security Administration Act 1992 (Administration Act) or Social Security Administration (Northern Ireland) Act 1992 ((Administration Act (Northern Ireland)) the overpayment can be recovered by the:

Secretary of State
by deductions under section 71ZC of the Administration Act (deduction from benefit);
by deductions under section 71ZD of that act (deduction from earnings); or
as set out in section 71ZE of that Act (court action etc); Tax Credits Act 2002 Section (29)(4)(b)

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Welfare rights adviser - Sefton Council, Liverpool

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I think that by following the ratio of the Anufrijeva case the following principles apply:

1. The decision must be notified to the claimant
2. The effective date of the decision is the date that it is properly made, whether notified or not
3. The decision probably has no legal effect until notified
4. The clock for exercising any appeal rights does not start running from the date that the decision was made but from the date it was notified

Bear in mind there is no right of appeal to a tribunal against a tax credit overpayment recovery decision only a tax credit entitlement decision