3. Miss I complains that in March 2022 HMRC incorrectly refused to write off outstanding tax credit arrears from the 2011-12 tax year that it was trying to collect.
4. Miss I also says HMRC was wrong not to compensate her for the distress and financial hardship she experienced by its decision to pursue this debt.
5. Miss I says she wants HMRC to write off the outstanding debt, pay her back the amount it has already collected and make a financial payment to her for the distress.
6. Miss I says she contacted the Adjudicator’s Office (the AO handle complaints about HMRC that have been escalated to them) on 15 August 2022 and complained about HMRC’s decision to begin recovering a tax credit overpayment from the 2011-12 tax year. The overpayment became known when she successfully applied for universal credit (UC) in August 2021 and HMRC transferred the debt to the Department for Work and Pensions (DWP). After this, HMRC began taking payments directly from her UC towards the arrears.
7. The AO investigated and found that HMRC’s decision was reasonable and in line with guidance. Miss I does not agree and made her complaint to us in March 2023.
10. Miss I says HMRC was wrong not to write off the outstanding arrears, because she did not get anything telling her about the arrears until a decade after the tax-year in question. At this point, it was too late to appeal and she thinks HMRC should write them off.
11. The AO disagrees and says HMRC did write to Miss I to advise her of the debt at the time and its decision to now collect these arrears is in line with guidance. For this reason, it did not ask HMRC to write the debt off.
12. Our ‘Principles of Good Administration’ state that when making decisions, public organisations should refer to and use all relevant guidance.
13. HMRC refused to write off the outstanding tax credit arrears because its COP26 guidance states customers must dispute the overpayment within three months from the date of the decision on an annual review notice. HMRC says it sent her this notice on 19 June 2012.
14. Miss I attempted to dispute the arrears around 10 years later, so it is clear that she was past the time limit to do this.
15. Miss I says that HMRC did not tell her about the notice before it wrote to her in October 2021, so she should be allowed to dispute the overpayment.
16. COP26 does allow customers to dispute tax credit overpayments after the three months in some exceptional circumstances, like if a customer had been in hospital for three months after getting the notification.
17. We can see that the AO considered Miss I’s arguments that HMRC had not done enough to make her aware of the overpayment. It did not think this was enough for HMRC to consider her late appeal to the overpayment.
18. It found that HMRC sent letters in June and September 2012 to Miss I’s correct address and none of these were returned as undelivered. The AO says that HMRC was not responsible for Miss I’s delay, it did not see any exceptional circumstances and it had no reason to recommend that HMRC should consider a late appeal in line with COP26.
19. We have seen evidence that HMRC sent the Annual Review Notice to Miss I’s address on 19 June 2012. Miss I seems to accept that this letter may have been sent, but thinks it does not properly make her aware of the debt because she lived in a shared house with nine other people so post would often go missing.
20. While we recognise Miss I may have experienced some post going missing we would not expect HMRC to do any more than send letters to her actual address.
21. HMRC policy states that if a letter is not returned undelivered, it considers it has been delivered to the customer. If Miss I knew that post would sometimes go missing, she could have contacted HMRC to let it know when she did not get her annual review notice.
22. HMRC’s decision not to write off the arrears was in line with COP26. We have decided that HMRC acted in line with the guidance and we are not critical of its decision to recover the debt.
23. Miss I also says that HMRC should compensate her for pursuing the arrears. Our ‘Principles for Remedy’ state that when someone is affected by a failing, organisations can consider a financial payment to put things right.
24. Because HMRC’s decision to collect the arrears was in line with guidance, we would not expect it to pay Miss I for any stress this caused her.
25. We note the AO found that HMRC had not tried to contact Miss I to collect the arrears between April 2017 and August 2021, although it had Miss I’s contact details and address. It thought this delay was unreasonable.
26. It said the £50 HMRC had already offered was enough to put things right and it made no other recommendations.
27. HMRC guidance says, ‘payments for worry and distress are meant to be a token - a way of acknowledging that our mistakes and delays have affected someone badly…The payments will usually range between £25 and £500, but experience shows that the vast majority of payments are at the lower end of this range.’
28. We know debt recovery is causing financial hardship for Miss I, and that it was a shock to suddenly become aware of old tax arrears.
29. The payment offered by HMRC is in line with its guidance. For us to recommend a higher payment, we would need to have seen a bigger impact caused by the delay. The shock and distress Miss I felt at hearing about the debt in 2021 would likely have been the same if HMRC had made successful contact in 2018 or 2019. We do not think the impact of the delay between 2017 and 2021 was enough to mean HMRC should have paid her more.
1. We have carefully considered Miss I’s complaint about HM Revenue and Customs (HMRC). We know Miss I has had a long dispute with HMRC about her outstanding tax credit arrears.
2. We do not see any guidance that tells HMRC to write off these arrears or that it should compensate Miss I. We will take no further action on Miss I’s complaint.