Paula5th September 2011
Two pieces of very interesting news regrading HMRC and tax credits overpayment. In keeping with the apparent cosmic ‘pleasure / pain’ balance (although pleasure is in short supply when dealing with HMRC), we have one piece of bad news and one piece of potentially good news.
Bad first. Recovery (aka repayment) of overpaid tax credits via PAYE tax codes.
The Child Poverty Action Group (CPAG) report that tax rules have been changed to make this method possible since July 2011. To quote CPAG’s recent newsletter…
“Letters will go out to claimants who may have an overpayment suitable for recovery in this way, and tax codes would be altered from April 2012 for the 2012-13 tax year. It is thought that this will be an option to recover tax credit overpayments of between £100 and £2,000. The Revenue stated that there would be safeguards to prevent hardship.“
Over the years I have heard of several shocking HMRC plans to automatically recover overpayments, most of them sneaky and sinister. Until now, it’s never been confirmed they had the right to implement them. But I am now starting to see letters to overpayment victims threatening to add attachments to earnings and / or sell their possessions, and I have heard of plans to access people’s bank accounts, but yet again I can get no confirmation they actually have to power to carry out these threats.
I believe a lot of these threats are an exploitation of their tax collecting powers, which they have wilfully misapplied to their separate and very different tax credit role. TCC and other agencies have intervened before when HMRC have tried to use ‘tax evader penalties’ on TC overpayment victims to not only deny them their rights but force recovery of overpayments that haven’t even been explained, let alone investigated as to cause. Until we intervened, HMRC officials were repeatedly misleading judges and the rest of the judiciary that they were actually allowed to do this when they weren’t. So you’ll understand why I’ve kept a close eye on what HMRC claim they have the power to do. That they have changed tax law to allow themselves this latest method of recovery smacks of HMRC’s arrogance.
My concern is that when HMRC control the method of recovery, as with their ‘automatic recovery’ ( i.e. reducing your current award to repay an overpayment, as opposed to asking you to make payment in cash / direct debit) they abuse the rights of the victim by continually reapplying the recovery method … even when the victim is disputing. When pushed to comment, HMRC will state that they only have to suspend recovery during the first stages of a dispute, but as this means that victims are apparently then expected to repay an overpayment while disputing that they owe it, I always insist at each new stage that recovery should be suspended and HMRC usually quietly drop the recovery issue while the dispute is ongoing.
The only time I ever have trouble with this is when HMRC have direct access to the recovery method, and so far it’s only been with the automatic recovery. Each time it comes up I have to argue in circles with HMRC, the Adjudicator’s Office, the Parliamentary Ombudsman and anyone else unlucky enough to answer the phone to me, until they get so bored with me and so stumped for a reasonable response they end up applying the oh-so-technical measure of typing ‘DO NOT RECOVER DURING DISPUTE’ on the victims case notes. (Which usually gets forgotten about within 6 months and I have to go through the whole farce again).
Unfortunately I doubt HMRC are going to be any more reasonable when it comes to hacking our PAYE accounts!
The other point I wanted to mention, (the potentially good one) has had me scanning new and old reports, loosing count when I run out of fingers and toes, chasing in circles trying to clarify vague terms and gobsmacked at what seems to be blatant obfuscation in making it nigh impossible to compare one year’s figures to another.
What started it was seeing a report ( HM Revenue & Customs 2010-11 Report and Accounts ) that blithely mentions overpayment figures for 2009/10 currently stands at £2.14 billion! I’m almost number blind these days but that one pulled me up sharp. I double-checked our research library figures, spent hours clarifying what was included in the figures I was comparing, then got someone to check my work when all the digits started running off with my faith in myself to keep up. All came back to the same result: That figure is nearly two and half times the figure that’s published on HMRC’s website! In fact once I looked in to it, all the totals for past years overpayments have gone up. Massively.
Now, I am aware that due to the “annualised nature of the system” (as the smug gits put it), HMRC actually have up to 2 years to fart about with the figures on peoples awards, therefore early report figures will be inaccurate, but that’s quite some margin of error they have going there! HMRC’s own figures said that in 08/09 £0.917 billion had been overpaid, yet the Auditor Generals 2011 report says that £2.27 billion was. Which is interesting, because the lower figure represented nearly 15% of all claims being overpaid, so does this mean it was actually nearer 40% I wonder? There weren’t enough of the same figures in each of the many reports I looked at to compare all of what I wanted to, but I did spot repeated statements in summaries like “90% of errors are claimant fault” which is not just sloppy mathematically, but also pretty shocking when you consider HMRC is the un-adjudicated source of this so called statistic (therefore very resistant to admitting it may have been their fault).
It’s worth just mentioning that included in these ‘overpayments’ are fraud. It’s an insidiously little trick HMRC have always done that swiftly puts the genuine victims of this farce in the same category as the crime gangs , benefits thieves and jailed insiders who have exploited the system. Sympathy is hard to come by when we’re rubbing shoulders with this lot.
Anyway, the point I’m getting to is that it seems realisation is slowly dawning is that this farce can’t go on. Already they have calculated that £300million MORE THAN EXPECTED was overpaid in 2010 – 11 (total so far £1.5billion, so going on the scale of the previous estimates expected the final total to be around 3 to 4 billion), and that currently an exercise is underway to “assess the value for money of collecting £1.7 billion of tax credit debt not under active recovery”. (Translated; work out if financially it’s worth chasing this debt)
Whisper it; AMNESTY!
Between the upcoming swap to the newly planned benefit; Universal Credit (due in 2013 but expected to take up till 2017 to complete), and a perhaps naive hope of sanity prevailing, I have long hoped that I wouldn’t be the only suggesting this as the only reasonable solution. I don’t expect everyone to understand, just those who have been overpaid by a terrifying amount!
TCC worked out long ago that purely on a fiscal level chasing recovery of overpayments of less than £2000 was uneconomical. And that’s without factoring in the distress, hardship and workload caused to the victims and their family.
I’ve never advocated the rights of swindlers to get away with it, nor aimed to reduce the treasury’s coffers, all I have ever wanted was compassion for the position HMRC put us in and as much justice as possible in resolving it. We were told the money was ours to spend on life’s essentials and we did just that. If HMRC had told me this was actually a 4 figure loan they were going to bully me about for over 6 years, I would never have accepted it and I know many thousands of you have said the same.
TCC have long encouraged victims to keep their dispute ongoing, therefore resisting active recovery, even in the face of the many brick walls and automatons.
So I aim to keep you updated on developments and will end (finally) on that sweet little refrain … Not under active recovery … Not under active recovery … Not under active recovery!
Comment by susan at 10:14 am on 6th September 2011
Just wanted to say thanks for this information. We had a meeting with our MP on Saturday morning and he was in shock at the amount of money we have been overpaid. I have given him plenty of information to read about the whole fiasco, including Voices of Victims, and will definately be questioning him on our next visit about some of the facts you have on here. My husband is PAYE and, If HMRC decide to take our overpayment back via his wages we are really going to be struggling. I will keep you updated on any success or failure I have my MP.
Comment by Paula at 1:06 pm on 6th September 2011
Glad you found our info useful. Hope the MP is being useful.
Re the PAYE stuff, yup its scary isn’t it. You mention your o/p is large – if its more than £2000 then it shouldn’t been included in this new PAYE scheme. Hopfully thats a relief to you.
Don’t hestitate to contact me (email address above)if i can be of any further use.
Comment by Paula at 1:07 pm on 6th September 2011
*Email address below, lol
Comment by David at 12:57 pm on 18th October 2011
Have had my MP on the case to dispute this injustice and she seems to be powerless aginst the HMRC. Nobody seems to want to be accountable for this awful system and no one seems that bothered that thousands of people who signed up to a system which the Government said would help them has left them in debt. Where on the original form did it state that you may overpaid and have to pay these excessive amounts back ?
Comment by Paula at 1:55 pm on 25th October 2011
Exactly right David. In fact it didn’t. It wasn’t until the bills were going out in their millions that new guidence notes even highlighted overpayments could happen.
No other benifit system in this country operated like that at the time and we weren’t expected to understand Nth degree tax accounting to claim them either!
If i can be of any help in your case email me Paula@taxcc.org