Paula30th September 2010
As you will have seen in the media over the past few weeks, a new process of tax reconciliation is showing up a far larger scale of PAYE underpayment than usually seen. So now PAYE tax underpayments are crippling people and HMRC still haven’t learned to take responsibility.
Although this was warned about several months ago by the Telegraph newspaper, it didn’t grow legs until the figures were finalised. When that process was finally finished it revealed that 1.4 million people had underpaid tax in the last year and 2.4 million in last 2 years. Despite the fact they had all ‘declared’ the right details.
It seems that, if the slightest thing had changed with your pay and relevant circumstances in that period, there’s a really serious issue in HMRC being able to keep up and calculate your PAYE properly. The total underpaid amount is £2billion, meaning an average bill per person of £1,428. And, of course, these figures only cover the last 2 years. It’s not yet been stated what they are going to do about ‘wrongly reconciled’ accounts going farther back.
Cue the outcry! Unlike anything seen for the £8 billion worth of TC overpayment demands …
But right from the start the ability to ‘appeal’ was touted as a life saver. The idea being that if you can prove you gave HMRC the right information, it ‘should’ be written off on the basis that HMRC failed to act on information given. Now where have we heard that before?
This process is not going to be as reasonable as everyone thinks it will be. HMRC protect themselves in many ways, as we have seen numerous times in the past. For a start, David Gauke has already said they can’t afford to write-off the outstanding amounts; basically the same ‘cannot justify the cost to the public purse’ excuse that Tax Credit overpayment victims get thrown in their face.
So far, the only concession has been an amnesty on all bills under £300. So for those who had a chance of paying it off without years of penance, no bill. Anyone else; tough! They seem to have invented an amnesty that goes along the lines of ‘if we haven’t financially crippled you, we will let you off. If we have financially crippled you; pay up’.
The biggest PR faux pas came when tax chief David Hartnett said he “didn’t think they had anything to apologise for”. Presumably he felt that HMRC suddenly getting their jobs right was not something they should be sorry about. Of course, what he failed to see is that they had been doing it wrong until now, and HMRC gets to pass the effects of the mistakes on to others – at massive worry and cost to the victims. Ringing any bells?
Apparently Hartnett didn’t realise that a fat-cat civil servant passing out unexpected bills during a recession wasn’t going to go down too well, especially when he acted smug about it. He later had to publicly apologise. But note that he has only apologised for ‘if my words were considered insensitive’, not the actual foul-up at all.
Also note that, apparently, there is no guarantee that this second round of calculations is correct. What guarantees are we afforded that this isn’t just another set of incorrect figures from a national institution that has totally lost the plot?
So, for parallels between HMRC’s spectacular efforts with Tax Credit overpayments and PAYE underpayments we have:
And I thought HMRC couldn’t do consistency!
Paula8th September 2010
Following from the previous post this post explains what bankruptcy is. The idea is to present you with information about the nature of bankruptcy and what you can expect from a real life perspective. Some myths will be dispelled. The details of benefits and consequences will be saved for a later post.
As you may already know, bankruptcy is a legal process by which, subject to some restrictions, you can become free of your bankruptcy debts. This includes tax credit overpayments, though care must be taken with the timing of your petition if they are to be included. There are serious consequences to bankruptcy but it can often be a viable solution for dealing with debts that you are unable to repay, particularly if you have no assets and it will not affect your earning potential.
To petition for your bankruptcy you will need to meet the ground, which is you are unable to repay your debts. You will need to present a bankruptcy petition and a statement of affairs to the local county court where you have lived or traded for the longest period in the previous six months. You will also need to pay a court fee of £150 (means tested) and a deposit of £450. If you meet the grounds then the court will usually make the order. You may or may not see the judge.
Your bankruptcy will usually end automatically at the end of twelve months, though it can be shorter or longer depending on your case. During this period your assets will dealt with and your affairs will be investigated.
The role of the Official Receiver is to investigate your affairs and to protect your assets for the benefit of your creditors until a trustee is appointed. The Official Receiver is an officer of the court and their obligations are derived by law.
Upon the making of the bankruptcy order the Official Receiver’s office will contact you in order to establish essential information. Following this you will receive an appointment for an interview. One purpose of this interview is to establish if you are to blame for your bankruptcy. It will usually take place over the telephone but in some cases you will be asked to attend a face to face interview. In the minority of cases no interview will be necessary.
During the bankruptcy you have a duty to provide the Official Receiver with such information that he or she may reasonably require.
You will not usually deal with the Official Receiver directly, it is more common for you to deal with a member of his/her staff.
It is the duty of the Trustee to realise your assets for the benefit of the estate. The trustee will either be the Official Receiver or a licensed insolvency practitioner. If the realisation is likely to be protracted or complex then a licensed insolvency practitioner will be appointed.
It is a myth that you lose all of your assets in bankruptcy. Some assets are exempt and others may not have a saleable value worth the trustee dealing with. I will explain this more in the next post titled benefits and consequences of bankruptcy.
During the year of your bankruptcy you will probably experience a bag of emotions. The most common are stress and uncertainty. This may affect the whole family. A great strategy to tackle this problem is to seek advice before you go bankrupt so that you know what is about to happen.
Many people often begrudge paying for advice when it comes to bankruptcy. By paying for advice from a reputable professional you are likely to get greater support from someone specialising in insolvency. Of course the option to afford this advice is non-existent for some. Luckily there are charities that can help for free.
If your bankruptcy case is relatively simple then you may not hear from the Official Receiver after your interview. You can expect to receive standard communications by post. If your case is particularly complex or you are not compliant with your obligations and duties then you can expect much more contact.
During bankruptcy you are afforded legal protection which means that creditors cannot commence legal action against you without permission from the court. They should also not be contacting you about your debts. If they do you can simply explain that you are bankrupt and refer them to the Official Receiver.
After bankruptcy the stress and uncertainty begins to disappear. You will no longer have your debts and can look forward to moving on with your life. You will have difficulty obtaining credit but there are ways round this, for example raising a large deposit when applying for a mortgage. You can also take steps to repair your credit.
On a final note it is worth mentioning that bankruptcy, as all debt solutions, is a serious matter and you must seek advice. This is true even if bankruptcy is your only option. The above information provides an overview of bankruptcy and is presented for information purposes only. It must not be used to determine how to deal with your debts.
Paula18th August 2010
Tax credit overpayments can often result in a demand for payment from you, which can bring unwanted financial difficulties. For some this can be manageable, for others not so. If you find yourself in this situation then it is important that you know how to deal with your debts. This post will provide you with an overview of the main debt solutions.
Going bankrupt is usually considered the most consequential option for dealing with your debt. This is simply not true. The most consequential is doing nothing or choosing the wrong solution.
In its most basic form going bankrupt is one way in which you can wipe your debts, subject to some restrictions, to obtain a fresh start. Your assets will be shared out among your creditors and there will be an investigation into your affairs. I will explain more in the next post titled “What is bankruptcy?”.
An IVA is a legally binding agreement between you and your creditors. With the help of an authorised insolvency practitioner you will put forward a proposal to your creditors offering to repay a specified amount of the debt over a specified period of time. If approved and providing you have adhered to the terms of the agreement you will be debt free at its conclusion.
An IVA will typically involve you making monthly payments and/or making a lump sum payment. You may be expected to release equity in your property. During the IVA your creditors will not be able to commence legal action to recover the debts. An IVA will typically last five years.
For further information on an IVA take a look at the R3 leaflet Is an IVA right for me? It compares the IVA to bankruptcy.
A debt management plan is usually arranged by a debt management company who will assess your financial situation and then contact your creditors to structure repayment of your debts at an affordable amount. You will make one payment to the debt management company each month who will then distribute the agreed amounts to your creditors.
A debt management plan is not usually legally binding on your creditors and repayment will be expected in full. Many organisations charge a monthly fee for arranging this kind of solution and make a profit whilst doing so. A debt management plan will usually only be suitable as a short term solution.
Refinancing can take a number of forms. It involves using new finance to make your existing repayments more affordable. This is most commonly achieved by consolidating your debts using either a secured loan or an unsecured loan. The objective is to reduce your monthly repayments to a more affordable amount and/or to reduce the overall amount of interest that you will have to pay.
Refinancing will usually be an option if you have an income and a reasonable credit rating. A remortgage is an example of refinancing. It is essential that you seek advice if you are to consider refinancing, it is not the low risk option that it is often perceived to be.
Income maximisation is often overlooked. It simply entails you increasing your income and reducing your expenses. The objective is to increase the amount of money that you have to repay your debts and hopefully bring you within your budget. This type of solution is only viable if you have a small deficit in your monthly budget. Adopting an income maximisation strategy to your finances is good practice in any case.
As you can see there are a number of solutions available to deal with your debts, even where tax credit overpayments are part of the problem. The most important step you can take is to seek advice. The sooner you do this the less consequential your debt problem will be. There are a number of charities that you can seek free help from including:
Paula12th August 2010
Welcome to the Tax Credit Casualties newsletter for August 2010.
Although we are sending the newsletter out to our subscribers, we’ve decided to publish it here too as a bit of an experiment. But please subscribe if you haven’t already, because we may want to get in touch with you quickly if anything important crops up! You can subscribe to Latest News using the RSS feed, too, if you know how.
As always, please get in touch if you know something that we don’t …
You may of heard about the new coalition Government’s web-based ‘have your say’ initiative – AKA ‘Your Freedom’. Well, our Ali has been busy and created a vote for an amnesty on Tax Credit overpayments.
We have to get this ConDem lot to listen, so let’s use the means they’re offering and VOTE HERE. You just need to complete a simple 10 second registration process (top of the screen; click on ‘Register’) then add a rating by clicking on the grey/yellow stars just above the comments section, further down the page. Five stars would be nice, thanks! Feel free to add a comment too, explaining how much this dangerous farce has affected you and your family.
Here at TCC we often feel we are fighting the agencies that are supposed to be helping us, as well as fighting HMRC. We’ve already had to accept that the Information Commissioners Office is actually pretty toothless when it comes to HMRC infringing our Data Protection rights, and The Adjudicator’s Office (AO) probably have my number blocked now after I tried (several times) to get a policy statement regarding HMRC attempting recovery action while a case was being disputed, but the AO have now developed a new habit that has left me foaming at the mouth.
Once a case gets to the Adjudicator’s Office (AO) stage of the dispute process, the procedure is that the AO asks HMRC to produce a report on the circumstances of the claim, overpayment and dispute. This report is then sent to the victim (only after TCC demanded this become standard practice, by the way) and the victim is asked to comment on HMRC’s report. HMRC are then asked to comment on the victim’s comments. This report and the responding comments then form the basis of the AO’s investigation. Sounds fairly reasonable so far?
But over the last 3 months we have been involved in no end of cases where the AO have supplied the report and, at the same time, given a very short deadline in which the victim is asked to respond. Usually 2 weeks or so. Given that this report often runs to at least 10 pages, involves complex ‘facts’ and figures that definitely require double checking AND that this is their ‘day’ job, not ours or their victims, this is totally unacceptable. The majority of the time we have had to wait 3 months, or more, for the AO to do anything other than acknowledge receipt of the dispute, and then a further 6 months or more for HMRC to actually produce the report. To then give the lay-person claimant less than 4 weeks to respond is arrogant in the extreme.
When my workload recently became near impossible I decided we needed to take a bit of power back, so I started resisting the AO’s deadlines and complaining about the attitude it belies. More and more people are telling me they are getting these types of deadlines, and most are putting family and other commitments aside in a rush to comply. As such, I have developed a template complaint letter people might like to use should they be faced with the same situation.
All the responses we’ve had to this letter, from the AO, have accepted the new deadline proposed in the template and I feel it is important that we continue this policy. Not only for the sanity of the overpayment victim, but also because I fear rushing to respond to the report means that the quality of the response does the victim’s case no favours. And, of course, because such an attitude and approach needs challenging strongly.
You may have seen mention of the Income Disregard feature of Tax Credits in the press recently. I feel it important to highlight that this feature is not the safety net the Treasury and HMRC have lauded it to be. While the proposed reductions, from £25,000 to £10,000 by 2011 and down further to £5,000 in 2013 are indeed a concern, many of you are wondering why this feature has not been applied in your own overpayment case already.
The problem is that, once again, the media have over-simplified to the point of actually completely misrepresenting the issue. Nothing new there, (remember the great proclamations of “all overpayments to be written off” in 2006, 07, 08 and 09?), but this portrayal is creating false hope and unfair criticism of overpayment victims; i.e. why are we moaning when we are being let off with £25k worth of income?
In short, the disregard only applies in very limited circumstances. And shockingly, those circumstances only exist when you have disregarded official advice to keep HMRC notified of circumstance changes throughout the tax year. £25,000 of income is NOT ignored.
Instead up to £25,000 of income ADDITIONAL to the income HMRC have recorded for you can be disregarded, but only if you did NOT update HMRC of income levels at any time since that years claim started.
Note that you can be accused of non-compliance and even neglect if you do this now, but this feature always has been a patch measure that didn’t offer what it claimed. When Tax Credits were first rolled out, the Income Disregard was £2,500, meaning your income could improve by this amount and you shouldn’t end up with an overpayment. BUT, crucially, the system was operated differently then, and as such no one’s income was updated on their claim until the end of the tax year, even if they did notify HMRC ‘in year’. Therefore the disregard applied to nearly everyone.
When the level of overpayments were first revealed, some 18 months after the public roll-out in 2003, and when the subsequent outcry had generated enough embarrassment, the government bodged the disregard to the admittedly preposterous £25k and claimed they had solved the problem of normal people not being able to predict their income 12 months in advance. TCC cried foul on that at the time and have done ever since.
This is no safety net. There are still no means to protect people who follow compliance procedures AND earn more than they estimated. HMRC have not faced up to the fact that most claimants do not enjoy the benefits of stable incomes and therefore their income varies either through pay increments, new jobs or changeable working hours.
It’s only been in the last year or so that they have included a feature to allow you to advise them that your income for the new tax year will be different from the income for the previous year. Until then they worked on the assumption that everyone earned the same amount year in year out, and started all new claims on last year’s income. As such you had to advise them, when the new claim started, that your income level was different, and the claim had to be recalculated. Guess what that meant; the Income Disregard could now not be applied to that year’s claim, because you have updated your circumstances in year. Crafty!
We are concerned about the proposed drops, especially the aim of reducing it to £5k by 2013, as this means that a fairly modest improvement in circumstances could cause an overpayment bill of the same size or more. But the recent media coverage of the issue has done no one any favours and we felt you deserved a thorough explanation of this feature.
This week we learn from the Comptroller and Auditor General’s report on HMRC’s 2009-10 accounts that the Treasury is still struggling to recover Tax Credit overpayments made in error. Thanks to the efforts of Tax Credit Casualties and other welfare groups and charities to advise people of their rights, HMRC’s “collection rate for Tax Credits debt … is substantially lower than that for tax debts”.
This is attributed to claimants being unable to repay and the Revenue prioritizing the task it has always done – collecting taxes – over the role it acquired but never really wanted – playing Tax Credit award hokey-cokey with poor families who are in no position to return money to the taxman just to make the bureaucrats’ books balance.
In the last tax year, HMRC – and this is only its own rough guess, almost certainly underestimated – made “incorrect payments to claimants of between £1.95 billion and £2.27 billion”. We are led to believe that a “new approach” has miraculously prevented “an estimated £569 million of error and fraud in the year”, sparing some families the terror and despair of receiving threatening Tax Credit recovery letters.
Suddenly someone – the Comptroller and Auditor General – has recognised that there is more “error” behind Tax Credit overpayments than “fraud”, and that these two words can occur in this order in a sentence about Tax Credits without the gratuitous prefix of “claimant” insinuating that everything is somehow the innocent claimant’s fault.
It’s about time!
TCC wrote to the Prime Minister in May, and went to a lot of effort to describe the flaws of the system and the impact it has on claimants.
Unfortunately so far we have only had the bog-standard acknowledgement and promises to pass our concerns to the Treasury. Very disappointing indeed, as this is all we used to get from Gordon Brown as well. To add insult to injury we haven’t had a response from the Treasury yet either, and probably won’t without chasing them up … which we will.
TCC had hoped to develop our links with the new coalition government as previous relationships with key members had been very positive. However we hit a stumbling block as our main contact was one Mr David Laws, who I’m sure your aware now holds the record for the shortest time spent in a ministerial post when he had to resign as Chief Secretary to the Treasury after just 17 days.
We will keep trying, but they are going to have to do better than they have so far to prove themselves much different to their predecessors on this issue.
On a positive note, a quick tally tells me that we are nearing the £300,000 mark in confirmed, successful write-offs. £50,000 of that was achieved in the last 6 months. As I have mentioned previously, this isn’t actually a very true reflection of our success rate because:
The cases included range from bills for £300 up to £16,000 , with the average being approximately £4,000. The length of time the disputes have taken varies from six months to six years and the causes range from zeroed income, wrong number of adults or children on the claim and HMRC’s failure to record information, all the way to reasonable mistakes on the claimants part.
Overwhelmingly, this rough figure shows it is more than possible to win a dispute (If you’ve won your case through using this site, please contact us and let us know). While now may not be a good time to celebrate ‘costing’ the public purse, please remember not only are we innocent victims of this mass incompetence, but to continue to force millions annually into thousands of pounds of debt will cost the public purse much much more.
Struggling families with millstones around their necks become more of a drain on public resources the more vulnerable they become. Low income earners are typically in low paid, unsecure and changing employment. One unexpected or unachievable bill forces further, spiralling need for state aid. From income related benefits, to insolvency, to additional welfare support for families in poverty, to emergency mortgage support. Not to mention additional national expenditure to try and combat the social implications of increased poverty.
Writing off these debts and preventing them occurring again by an amnesty and a return to fixed payments is the only way to save the country money in the longer term.
We hope you are listening, Messr’s Cameron and Clegg.
That’s all for now, folks. As normal, we’ll let you know if anything important happens! Keep Fighting!!
Paula29th July 2010
This week we learn from the Comptroller and Auditor General’s report on HMRC’s 2009-10 accounts that the Treasury is still struggling to recover tax credit overpayments made in error.
Thanks to the efforts of Tax Credit Casualties and other welfare groups and charities to advise people of their rights, HMRC’s “collection rate for tax credits debt … is substantially lower than that for tax debts”. This is attributed to claimants being unable to repay and the Revenue prioritizing the task it has always done – collecting taxes – over the role it acquired but never really wanted – paying tax credit award hokey-cokey with poor families who are in no position to return money to the taxman just to make the bureaucrats’ books balance.
In the last tax year HMRC – and this is only its own rough guess and almost certainly underestimated – made “incorrect payments to claimants of between £1.95 billion and £2.27 billion”. We are led to believe that a “new approach” has miraculously prevented “an estimated £569 million of error and fraud in the year”, sparing some families the terror and despair of receiving threatening tax credit recovery letters.
Suddenly someone – the Comptroller and Auditor General – has recognised that there is more “error” behind tax credit overpayments than “fraud”, and that these two words can occur in this order in a sentence about tax credits without the gratuitous prefix of “claimant” insinuating that everything is somehow the innocent claimant’s fault.
The coalition government has already indicated that, as staff leave HMRC, there will be no new staff and hence a reduction in workforce. Yet for tax adjustments alone, HMRC has a backlog of “18.2 million cases … awaiting action”, and expects to be handing back £3 billion in overpaid tax whist chasing underpaid taxes of £1.4 billion, without any extra staff. Figures show that “the value of tax credits debt had increased to £4.5 billion” and the Revenue now needs to assess “tax credit debtors’ ability to pay their debts … [and] extend this approach to older debts so that it can pursue debts that can be recovered cost effectively, and write off the others”.
We claimants need to be clearly demonstrating to our new government that the state-sanctioned abuse perpetrated by the last government on innocently overpaid victims cannot continue, and we will fight to the bitter end to prove that these are not our debts, that we will no longer be bullied into paying for the taxman’s mistakes, and that these so-called debts cannot be “recovered cost effectively” because we will evoke every part of the dispute process we are entitled to have our cases reviewed under, until we see justice done. These reviews do not come cheap; the Adjudicator and Parliamentary Ombudsman are snowed-under with tax credit overpayment dispute cases and are increasingly likely to be so for the foreseeable future.
The £4.5 billion reputed to be outstanding in tax credit “debt” is a huge sum, but still less than the reported £5.8 billion in tax credits which goes uncollected each year, which is more than enough to fund a full write-off. Spared from having to devote any more scarce time and resources to the endless bureaucratic trail that costs the public purse far more than is ever recovered from the hapless overpayment victim, the Revenue can direct its energies towards taxing people correctly and getting their tax credit awards right first time.
With this government made up of Ministers who made time for Tax Credit Casualties when they were in Opposition, MPs will be carefully gauging the mood of their constituents before deciding whether to be true to their word or not. We can all help persuade Parliament that “Justice is an Amnesty” by writing to our MPs asking them to write to Chancellor Osborne. Let’s finish the job we started together in 2005 and lay to rest Brown’s legacy of tax credit debt once and for all!
Paula15th June 2010
Receiving a tax credit overpayment demand is incredibly stressful, creating massive instant debt out of the blue, placing victims at the mercy of the ruthless, all-powerful Revenue, and often arising from official errors or inbuilt system quirks which victims fight for years to resolve. Victims report being treated like criminals by bureaucrats.
Suicidal thoughts, despair, depression, family hardship, relationship breakdown, intolerable stress, physical and psychological illness, loss of sleep and feelings of helplessness are frequent side-effects of Gordon Brown’s “Flagship” Tax Credits.
Tax credits, when they go wrong, bring court threats and life-wrecking bills and leave people physically and mentally battered. Imagine how much worse the situation is when the victim is already a mental health survivor, suddenly facing the added worry of either finding money they do not have for a debt they never created, or desperately seeking exoneration in a system where, by default, the claimant is always guilty until proven innocent, and the Revenue acts as judge and jury in its own cause.
For the last five years, countless claimants with mental health needs have come to Tax Credit Casualties for support, exhausted by the bureaucracy, degradation and injustice heaped upon them by Brown’s Treasury. It is bad enough that some of the lowest paid, hardest working families in Britain, because of state ineptitude, are forced to devote hours of their precious time to doing the Revenue’s job for them, painstakingly evidencing what officials did wrong until, years later, they are heard.
Yet to have to do this if your average day is already a battle against chronic fatigue, anxiety, depression and debilitating illness is intolerable. We cannot hold people with mental health needs hostage to state-created debt, beating on a bureaucratic brick wall. “Reasonable adjustments” must be made to the dispute process so that people living with mental illness do not end up capitulating to state-sanctioned bullies simply because they have no more fight left in them. It isn’t fair, and it is certainly not in the public (taxpayers’) interest.
Tax credit policy does not match the experiences of mental health survivors, who report no let-up in bullying tactics – condoned by Brown – whilst their health deteriorates. Meanwhile, here’s what the policy says:
We will need a letter from a health care professional or mental health social worker explaining the mental health problem to enable us to deal with these cases. In most cases the evidence provided will be sufficient to relieve the customer from responsibility for payment.
- For sole debts we will write to the third party and the customer to let them know that we will not continue with recovery of the overpayment.
- For joint debts we will continue with recovery from the other partner…
(Ref: HMRC Leaflet ‘How HMRC Handle Tax Credit Overpayments‘)
The following excerpts come from the HMRC Debt Management and Banking manual:
This guidance is for the recovery of Tax Credit overpayments where it is claimed that the claimant, or one of the claimants in a joint household, is suffering from a mental health problem.
These cases should be dealt with locally. The number of cases received is small but due to their sensitivity they must be handled carefully and sympathetically.
If you receive information/evidence about the mental health problem of a claimant you can agree not to pursue that claimant for payment. This is to prevent any detrimental effect or unreasonable distress to the claimant (This text has been withheld because of exemptions in the Freedom of Information Act 2000).
In the majority of cases, the initial contact about a claimant’s mental health problem will be from a third party on behalf of the claimant, such as from a doctor or psychiatric nurse. Organisations such as MIND and Citizens Advice Bureaux can also be involved.
Note: Mental Health cases should be overseen by a Higher Officer or above.
The Money Advice Liaison Group (MALG) has produced guidelines which provide additional information and understanding about dealing with customers with mental health problems. These guidance lines can be found in the DMB Guidance Gateway under ‘Good Practice Guidelines.
DMBM555620 Tax Credit overpayments: Mental Health cases: Evidence required
The Disability and Discrimination Act 1995 defines a person with a disability as someone with a ‘physical or mental impairment which has a long-term adverse affect on his/her ability to carry out normal day to day activities’. This definition should be used when considering the effect of the mental health problem on the claimant’s ability to repay.
The evidence should include the nature of the illness and as far as possible, whether the illness is likely to be long-term (for example schizophrenia) or where the prospects for recovery are expected to be good (such as depression).
If the initial approach is a letter from the third party explaining the mental health problem, or includes such a letter from the claimant or third party, treat this as evidence obtained, see DMBM555630.
If the required evidence is not initially available, you should write to the claimant or third party asking for documentary evidence about the nature of the illness and its prognosis (likely outcome) from the claimant’s
- community psychiatric nurse
- general practitioner (Note: some GP’s charge a small fee for this service)
- mental health social worker
- other healthcare professional
DMBM555630 Tax Credit overpayments: Mental Health cases: Evidence obtained
Only in exceptional circumstances will the evidence received be insufficient to relieve the claimant from responsibility for payment.
If the evidence satisfies you that the claimant should not be pursued for payment of the overpayment(s), you should
- For sole debts
- write to the claimant and/or the third party to advise that the overpayment(s) will not be pursued
- (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
- For joint debts
- write to the claimant and/or the third party to advise that the overpayment(s) will not be pursued from them and ensure no further correspondence is issued to the claimant
- make the following Retained note in Household Notes on the NTC system ‘’Mental Health case – decision to relieve [XXXX] from responsibility for payment of [£XXXX (original amount of the client’s share of the overpayment)] for the year/period [XXXX]. Made by (the decision maker’s name)’’
- enter the same note on IDMS
- remit any overpayment(s) due from the claimant under Type 5a (Hardship)
- continue to recover the other claimant’s share of the overpayment (note; the Tax Credit and IDMS systems will continue to reflect a joint record and this cannot be amended at present)
- ensure that any court entry is done manually, not through the County Court Bulk Centre (CCBC).
We need to remind HM Revenue and Customs that by statute it must exercise discretion, and write off tax credit debts for claimants who have mental health needs; to fail to do so is in breach of the Disability Discrimination Act.
We also need to remind our politicians that failure to ensure that policy is consistently applied is sanctioning the abuse of people with mental health needs, and will not be tolerated any longer.
Paula10th June 2010
Following on from our letter to David Cameron, I’ve put together a letter that everyone can send to their MPs, asking them to support our call for an amnesty.
The letter is published below. You can download a copy here, in Word format, to edit and send to your MP: Download MP Amnesty Support Letter.
We are asking you to send these letters to your MP because we can’t! If we were to write to every MP, our letters would be ignored because they can only act on behalf of their constituents.
But if you send this letter to your MP, it’s a completely different story! Not sure who your MP is? Find out here!
Please take this small amount of time to do something for your campaign, even if you’ve never joined in before. It will make a difference. We’re doing what we can, but now it’s up to you! Be a Tax Credit overpayment rebel …
[Name of your MP] MP
House of Commons
Dear [Name of your MP] MP,
I am writing as a member of your constituency to ask for your help, on behalf of both myself and the national user group Tax Credit Casualties (www.taxcc.org ) in ensuring that this Government ends the unfair, punitive recovery of tax credit overpayments caused by system errors.
Tax credits were meant to reduce poverty and make work pay but up to £5.8 billion of tax credits goes uncollected each year, according to the previous Labour government’s figures.
The Citizens Advice Bureau has found that only 1 in 5 entitled people actually claim working tax credit, many fearful of bureaucratic errors and unsolicited future debt. Advertised as “Money With Your Name On It” to offset low wages and provide vital support for lower income families, countless honest workers trusted HM Revenue and Customs to correctly calculate their entitlement, and spent their money in good faith providing for their dependents. The draconian recovery tactics now used by HMRC to snatch back historic overpayments strikes terror into the heart of innocent people and would be the envy of any dictatorship; totally inappropriate to a nation whose pride is its sense of fair play. HMRC is allowed to endlessly admit sloppy mistakes on overpaid claims, yet continually absolve itself of all responsibility, being its own judge and jury. Millions of pounds are being spent in the pursuit of money which has already gone, whilst the low take-up of tax credits is marvelled at, analysed and dissected, and further money thrown at encouraging reluctant lower income families to claim. Meanwhile the obvious solution is ignored.
We need this coalition government to grant an immediate Amnesty of all non-fraudulent overpayment claims – supported not simply by our new government, but all parties, for the good of our nation. If shame and compassion haven’t to date prompted an urgent write-off, the staggering long-term costs of deadlock dispute should. One look at the balance sheet for recovery versus write-off should soon convince any critic that under the current, draconian recovery policy, the Treasury’s resources are diverted and overstretched on an endless bureaucratic trail that invariably ends up costing more than is recovered from the hapless overpayment victim. The system cannot move forward because it is chaotically busy looking back, haemorrhaging scarce public money as it goes.
Despite many overpayment victims being kept unaware of their rights, they soon sense injustice and growing numbers are empowering themselves to fight back. Hence, Tax Credit Casualties (TCC) has grown from a handful of founding members to a multiple award-nominated national voluntary user group whose membership runs into thousands, and whose free dispute pack has – with their blessing – been begged, stolen and borrowed by welfare rights, tax justice groups and unions as a template for their own self-help booklets. Over 100,000 unique visitors have accessed their website, and 1000s of people have acknowledged their support in winning their cases.
The beauty of consumer action is that every successful case simply adds to the overwhelming body of evidence TCC now has that the system, for all the rhetoric of its success, is failing too many honest, hardworking families. This accumulated knowledge has helped politicians, councillors, the media, tax groups, solicitors, unions, charities and welfare agencies – who now consult us when researching problems with the system – to better understand where the problems lie in the current system. Bad practice, data loss, insider fraud, the cruel annulment of previous awards when returned renewal packs go missing, the maternity leave trap, HMRC internal guidance to only discuss the issues claimants themselves raise, the rhetoric-practice gap in exercising Revenue discretion in cases of serious illness, bereavement, mental ill health and acute hardship, breaches of confidentiality and premature court action are just a few examples TCC has found.
Every victim successfully evidencing their innocence of blame, through data access requests which cannot lie (although you must believe that the instances in which key evidence fails to arrive in the data bundle received by the claimant victim on a first request far exceeds the level of coincidence) provides a further piece of the hellish jigsaw, showing a failing, incompetent and ruthless system. This can no longer be ignored by politicians of any party; it is quite simply wrong. Within all our main political parties there are supporters of a full write-off, and an Amnesty has been sought at various times by Citizens Advice, Advice Northern Ireland, the Child Poverty Action Group, One Parent Families, the Royal College of Nursing, the GMB and UNISON and the Parliamentary Ombudsman, among many others.
[Here you can insert a short summary of how you or a family member has been affected by a non-fault tax credit overpayment, and the impact this has had, especially on someone’s health and wellbeing or chance of a better life.]
I want to see our new government putting just a portion of the unclaimed tax credit billions to good use, freeing the innocent indebted from the nightmare of tax credit overpayment bills. This will give honest victims back their lives and dignity, as well as restoring public confidence in all our political leaders, whether in government or opposition, to take the interests and wellbeing of their constituents seriously. You will know how much this has been in question recently.
I urge you to support a tax credit overpayment Amnesty as an important step towards tackling poverty, encouraging future take-up of tax credits by qualifying families, and securing a safer, fairer tax credit system. Please let me know by return of post that you will be adding your support to this vital action.
Please share this with all of your friends. The more, the merrier!
And keep campaigning, because we’re going to win!
Graham28th May 2010
Tax Credit Casualties are in the process of writing to many MPs in our new Government. We thought you’d like to see the letter that David Cameron has received from us this morning, so we’ve published it below.
It’s a long letter, but worth reading because we believe that it says just about everything that can be said about Tax Credit overpayments and how unjust the system truly is. Why not send a copy to your own MP, asking them to do their best to make sure that the Government acts on what we have written?
Dear Mr. Cameron,
Congratulations on your new appointment as Prime Minister and leader of our exciting new Conservative and Liberal Democrat Coalition Government. We think this is a very positive step forwards to a new way of working, and fully support your ambitions.
Whilst we appreciate that there are many items of urgent business requiring your attention, we did want to take this opportunity to remind you that casualties of the Tax Credit system are still waiting for help from Central Government. Some of our members have been fighting the unjust repayment of overpayments for five or six years now and have been disregarded and disenfranchised by the previous Government.
The people of the United Kingdom urgently need reform of the Tax Credit system to reinstate the fixed term payments that worked so well in the days of Working Families Tax Credits, but they also urgently need an immediate amnesty on the repayment of all non-fraudulent overpayments.
We have previously highlighted the unfairness of the Tax Credit system and the devastating impact that overpayments have on families, in our ‘Voices of the Victims’ booklet. Yet we continue to hear of more and more injustices on a daily basis.
So many overpayments are caused by HMRC themselves, through a mixture of poor training, understaffing, incompetence, computer system faults, internal fraud and the very complexity of the system itself.
One recent case resulted in a young mother, who was helped back to work through an apprenticeship, losing her position towards the end of her apprenticeship because her Tax Credits were withdrawn. HMRC had retrospectively decided that an apprenticeship was not work. Whilst HMRC later reverted to their original decision that an apprenticeship was actually work and she no longer has to repay her Tax Credits, she has still lost her apprenticeship and the opportunity of improving both her and her child’s lives.
The Tax Credit system was designed to be heavily automated, yet was broken even before it was implemented. This placed huge demands on a reduced HMRC workforce and resulted in blocks of inexperienced HMRC staff being shuffled around to whichever department had the biggest fire to fight at the time. To some degree, this is still happening.
Very often, advice given by HMRC to claimants turns out to be wrong and causes an overpayment. Yet when a data Subject Access Request is submitted by the claimant, the data that is returned omits the single item that would incriminate HMRC, and therefore ensures that the claimant, unjustly, remains responsible for repayment.
Computer software faults still exist, with Tax Credit Office personnel having to find ways to ‘fool’ various software modules so that claims can be paid. This practice causes further problems that few TCO employees can recognise, and therefore cannot compensate for, so the innocent claimant ends up repaying an overpayment that never happened.
In one such example, a claimant recently contacted us because she had received a large overpayment bill. On analysing her Subject Access Request data from HMRC, it transpired that this claimant had actually been underpaid since 2003, to the total of some £10,000, because of this software problem. We have still to learn whether she will have to repay the alleged overpayment.
A particularly vile practice of HMRC is the annulment of awards and the fact that they make no allowance for losses within the postal system. Should their end of year paperwork be lost at any stage of its travels through the postal system, and not recorded as received by the Tax Credit computer system, the whole of the previous year’s award is demanded back as an overpayment. There are no second chances.
Injustice exists even within the dispute process that is available to claimants who have been overpaid through no fault of their own. HMRC’s internal dispute procedure uses the information contained in their Code of Practice 26 as their rule book. This has been amended several times since 2003 because of unfair flaws that strongly favoured HMRC, yet claimants can still only dispute their overpayments in accordance with the version that was in force when their overpayment occurred.
To this day, HMRC still apply these rules unfairly. For example, if the claimant made a minor mistake and HMRC made a huge error, the fact that the claimant erred at all is used to justify the repayment of an overpayment.
Should the claimant have the stamina to take their dispute further, they find that both The Adjudicator, who is appointed by HMRC themselves, and The Parliamentary Ombudsman both also use HMRC’s Code of Practice 26 as their rule book. Without wishing to taint either office, it stands to reason that they have no brief which allows them to give a truly impartial ruling.
We have seen numerous disputes that have been taken to The Adjudicator and The Parliamentary Ombudsman, where HMRC have rightly been found to be at fault. Yet the claimant is still ordered to repay the overpayment, but is granted a very small amount of compensation because of HMRC’s failings.
The final possible step in the available dispute process is for the claimant to take legal action. Unfortunately, the very fact that a claimant is receiving Tax Credits is enough to take them outside of the financial qualification for legal aid. To the best of our knowledge, because of these financial restrictions, nobody has yet attempted this.
Hopefully, you can see that there is no truly impartial and independent dispute process available to Tax Credit claimants who wish to dispute overpayment bills that they know have been unjustly imposed upon them. The system is, in fact, still weighted heavily against them.
The amounts being disputed are very often not small, either. Although the majority of overpayments are in the hundreds of pounds, many are in the thousands and we often hear of repayments in the tens of thousands. The largest for which we have been asked advice is £58,000.
With the exception of annulments, when the sums of money being demanded are more than a few thousand pounds it is often because HMRC suddenly discover that an overpayment occurred several years ago and has compounded over the intervening years.
Apart from negating the intended benefit of Tax Credits, the repayment of large overpayments causes severe hardship for claimants. The poorest are always the hardest hit, simply because they receive the largest Tax Credit awards by default, and therefore have the largest overpayments.
HMRC have guidelines regarding hardship, allowing them discretionary powers to write-off overpayments if a case for hardship can be proven. We have never heard of this discretion being applied, yet we know of claimants who have long term, crippling repayment agreements.
One claimant that we know of, who was the victim of a known computer fault that zeroed his income, has to repay £65.46 a month for 8 years and 7 months, despite The Adjudicator finding HMRC at fault. Another is repaying £10.09 a month for the next 50 years, despite keeping the Tax Credit Office fully informed of circumstances, as is required.
One of the reasons that there has not been a huge and sustained public outcry about the numerous injustices of the Tax Credit system is because the majority of overpayments are recovered from future awards. This means that most overpaid claimants do not actually have to find hard cash with which to repay the Tax Credit Office because repayment instalments are taken at source by HMRC. In fact, the overwhelming majority of these claimants do not know that they can dispute their overpayments, and simply accept their reduced Tax Credit payments whilst glad to still be in receipt of them.
However, some of these claimants do decide to investigate their overpayments, and the fault is found to lie with HMRC far too often. Yet, once again far too often, the innocent claimant is forced to repay, their families suffering simply because injustice abounds unchecked within the Tax Credit system.
Many of the claimants who ask us for help to dispute their overpayments are facing bills of many thousands of pounds. This often happens because their award is terminated whilst an existing overpayment, sometimes accrued over several years of maladministration by HMRC, is being reclaimed from their current award.
Awards are terminated for many reasons other than non-qualification upon renewal at the beginning of the Tax Credit year. Joint awards are terminated at any time because relationships and marriages break down, or loved ones die, often after long and traumatic illnesses. Any existing overpayment that was being repaid, in instalments from a current award, then becomes an immediate payment due.
Once again, HMRC has the power of discretion to write-off these overpayments because of the ill health or psychological trauma that claimants experience, at a time when they are at their very lowest and in need of most help. Yet we have never heard of HMRC doing so.
We could go on and on, listing injustices within the Tax Credit system and the many ways that HMRC compound the effect of those injustices by using harsh tax laws that should never have been applied to what is effectively a benefit.
As for the financial argument of writing-off all non-fraudulent overpayments, when we launched ‘Voices of the Victims’ at Portcullis House in June 2008, we clearly demonstrated that pursuing recovery of these overpayments is not in the best interests of the public purse. This is an issue which is of increasing importance in the current financial climate. We also firmly believe that a fair and transparent system would reduce the costs of administering the system and deliver much needed efficiency savings.
Tax Credit Casualties are a small group of unpaid and unfunded volunteers who have willingly given their spare time and skills to help victims of unjust Tax Credit overpayments since 2005. We are joined together in a common goal from across the political spectrum and have found ways of working in harmony around our diverse and separate political beliefs.
We have enjoyed the support of both the Conservative and Liberal Democrat Parties whilst both were in opposition. Nothing regarding Tax Credit overpayments has changed, and now that both Parties share power justice can be done.
Reforming the Tax Credit system and ceasing the recovery of all non-fraudulent overpayments is in the best interest of the country and its’ people. We look to you to deliver this on behalf of every Tax Credit claimant who has been forced into debt by this unjust system, under a Labour government that deserted them and didn’t care.
Let yours be the Government that rights one of the biggest wrongs ever done to the people of the United Kingdom.
Tax Credit Casualties.
How else can you help? Easy! Just use the buttons at the bottom of the page to share this page with all your friends on Facebook, and ask them to do the same.
There are another 1 million overpayment victims out there who need help. Let’s show them where they can get it!
Graham27th May 2010
HMRC have published Tax Credit overpayment figures for 2008-09 today, trying to slip them out under the cover of their latest data loss scandal.
Yes folks, HMRC would prefer to admit sending out other peoples data to 50,000 Tax Credit claimants rather than be up-front about the latest overpayment statistics. We will be writing to the Information Commissioner about this latest data loss, but for now let’s concentrate on the overpayment figures …
Here’s a summary of the Tax Credit overpayment figures for 2008-2009 :
Once again, we are reminded of the sheer number of lives that are being ruined by Tax Credit overpayments.
Remember how you felt until you found Tax Credit Casualties? Please spread the word and do whatever you can to let people know that they can get help on our website. Let’s help as many victims as we can!
Graham14th May 2010
Somewhere during all of the political excitement over the past week, the Tax Credit Casualties website had it’s 100,000th totally unique visitor! That means that over 100,000 different people have now visited the website, and the number is increasing fast as you spread the word and tell more and more victims about us.
Hopefully, we have helped each and every one of you to dispute your overpayment bills and free yourselves from the unjust debt that was forced on you by the last Government.
Not bad for a bunch of unpaid, spare-time volunteers, eh! Well done to the whole TCC team, including the silent many who help out on the forum and everyone who spreads the word about the website. Thank you!
No time to rest yet, though. The overpayment figures for 2008-09 would normally have been published by now, but we understand that HMRC were told not to release anything that could have been embarrassing for Labour in the run-up to the election.
Now that’s done and dusted, the figures should be released soon and you can expect there to be around another 1 million overpayment victims that might need our help until the new Government sorts out the Tax Credit mess.
Yes … we are confident that the new Government will hold fast to their promises about Tax Credits. The Liberal Democrats and Conservatives have given Tax Credit Casualties varying levels of support over the years. We have absolutely no reason to believe that they won’t do the right thing now that they are in a position to do so.
Let’s all do everything we can to make this the year that Tax Credit overpayments become just another bad chapter in the book of British history!