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Overpayment of Tax Credits – What to Do

Overpayment of Tax Credits - What to Do

Do you think that you’ve had an overpayment of Tax Credits? If so, you may be eligible to cancel the overpayment or minimise what you need to pay – this can be done by reaching out to a member of the tax credit office at HM Revenue and Customs (HMRC).

HMRC might think that you’ve been overpaid if they make the mistake of getting information wrong about you and your circumstances.

The main examples of getting information wrong could be that they think your housing situation is different than it is, you’re earning more money than you are or that you’re not self-employed.

In the best-case scenario, HMRC should make it clear as to why they think you’ve had an overpayment of tax credits – usually by posting a letter to your home address.

If you’re unable to find out why you’ve been overpaid, calling the tax credit payments helpline number could be in your favour.

We recommend that you make a note of the date and time that you speak with a spokesperson from HMRC, as well as politely ask for their name and which office they work in.

More often than not, you might need the details of your telephone call when it comes to challenging an overpayment.

Read on to learn more about the steps you should take if you’ve been overpaid with tax credits – and how our team of experts at LJS Accounting Services can help you.


What Steps to Take If You’ve Been Overpaid

The first step in order for you to decipher whether you’ve been overpaid or not is by making sure your claim is true before going ahead and challenging a member of HMRC. Have you been overpaid, or is this what you’re really entitled to?

If you’re certain that you’re eligible for the tax credit overpayment you received, it could be worth letting them know. For them to look at the decision again in detail, it’ll be considered a mandatory reconsideration.

Once you’ve agreed with HMRC whether you’ve been overpaid Tax Credits or not, the next step is to simply wait. If you’ve made your statements clear and have enough evidence to prove you’ve been overpaid by mistake, the situation should be left in the hands of HMRC.

It can be worrying seeing that you’ve been overpaid Tax Credits, especially if you don’t know why. Knowing you might need to dispute with HMRC about why you’ve been overpaid and how you’ll give it back to them can be a stressful time, but HMRC do often make mistakes and the process doesn’t have to be so tedious.


Do you Have to Pay Back Overpaid Tax Credits to HMRC?

Whether you are required to repay your overpaid tax credits comes down to if it was a mistake made by HMRC or not. If the mistake was made by HMRC themselves for whatever reason, the likelihood of them making a request for you to recover the money is slim.

You can ask HMRC to reduce your overpayment if they haven’t done the following:

  • Give you the right advice after you’ve provided them with sufficient information.
  • Paid you the correct amount.
  • Correct any mistakes that you’ve told them about.
  • Correctly recorded any information given by you.
  • Confirmed in writing how many tax credits you’ll get in the next 30 days of you informing them about a change in circumstances.


What Happens if HMRC Didn’t Make a Mistake?

A dispute can still be opened with HMRC even if their overpayment wasn’t a mistake. If you were in a position where you were seriously ill or suffering from bad health in general, HMRC can consider your circumstances and look into the situation further for you.

If you don’t have a specific reason to dispute with HMRC, you’ll still be able to appeal. Many people who have debts from HMRC that need to be recovered can ask for them to be split into instalments as opposed to one lump sum.

No matter your job role, whether you work in construction, hospitality or you’re self-employed, an over payment of tax credits still must be dealt with.

Dealing with tax credits should be done as soon as possible. Typically, HMRC will deduct the tax credits that you owe from your payments, meaning fewer tax credits will be given to you until you’ve paid your debt off.



How LJS Accounting Services Can Help

Whether you’re having trouble with tax credit overpayment or just simply require some advice, LJS Accounting Services can help.

With 12 years of experience behind us, our team offers a range of services including Accounts, Personal Tax and Expert Start-Up Advice.

Contact us today at info@ljsaccountingservices.com or alternatively, visit our website and call whichever one of our offices is closest to you. Based in the North-West, LJS Accounting Services can be of assistance to those living in different areas.

Have You Got Any Questions?

Need to talk to someone? Get in touch with one of our consultants today and we will be happy to help.
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