3. Miss I complains HMRC is recovering an overpayment of Working Tax Credits (WTC) of £2,243 for the 2022 to 2023 tax year, despite her telling it on 19 August 2021 that she had stopped employment on 6 August 2021.
4. Miss I says this decision is unfair and has caused her extreme worry and distress. Miss I says she struggles sleeping at night because of this.
5. Miss I would like the overpayment to be written off, an apology and a payment for the stress and anxiety caused.
6. Miss I was previously claiming WTC. On 17 June 2021, she phoned HMRC to discuss her entitlement to the disability part of WTC. HMRC said that according to its records, during this phone call Miss I confirmed she was working 16 hours per week and was getting a Personal Independence Payment (PIP). Miss I says she told HMRC she was planning to end her employment on 6 August. HMRC told Miss I to contact it again once she had left employment and her circumstances had changed, as then she would no longer be entitled to WTC and her payments would stop.
7. On 18 June 2021, HMRC got a letter from Miss I saying she had been on sick leave since October 2020 and her employment would end on 6 August 2021, due to ill health. And, Miss I would not be trying to get another job after that date.
8. HMRC later recognised that at this point it should have contacted Miss I to discuss her circumstances relating to her employment. Unfortunately, HMRC failed to contact Miss I.
9. HMRC sent Miss I an award notice on 23 June 2021, explaining her WTC entitlement based on her working 16 hours per week and qualifying for the disability part. The award notice asked Miss I to tell HMRC if she had stopped working at least 16 hours per week.
10. Miss I says she wrote to HMRC at some point after July 2021, with her original P45, telling it again that she was planning to stop working on 6 August. Miss I says HMRC did not send her P45 back to her, so she contacted it again to ask it to send it back. HMRC says it lost her original P45 but instead sent her a photocopy of it. Miss I says this is how she knows HMRC knew she was planning to stop work on 6 August. HMRC said in its final complaint response that it received Miss I’s P45 in August 2022, not August 2021.
11. Miss I stopped work as planned on 6 August 2021. She tells us she phoned HMRC on 19 August to confirm she had ended her employment but to also advise that she was still getting WTC payments. Miss I said she was on hold for a long time and then put through to a member of staff. Miss I’s phone records show the call lasted for 33 minutes.
12. Miss I says she told the staff member she was still getting payments from HMRC. She says they told her she did not have to do anything until next April, when tax credits awards would be finalised. HMRC has been unable to locate a record of this call, so told Miss I it could not give any comment on the conversation.
13. Miss I continued to get payments. On 2 May 2022, HMRC sent Miss I the 2021 to 2022 Annual Declaration for her to complete and return. This asked Miss I to tell HMRC if she had returned to work after her period of sickness. HMRC said Miss I completed the 2021 to 2022 declaration in July 2022, confirming she had no changes to report.
14. HMRC said Miss I then contacted it on 3 August with a copy of her P45 telling it her final working day had been 6 August 2021.
15. As a result of this, HMRC sent Miss I an award notice on 29 August 2022 which showed she had received tax credits of £5,248.70. This meant she had received £3,479.96 too much for the 2021 to 2022 tax year.
16. HMRC said after getting Miss I’s correspondence of 3 August 2022, it made a mistake and did not act in line with the Tax Credits Act 2002. This is because it unlawfully re-finalised the 2021 to 2022 award. HMRC recognised its error and wrote off the £3,479.96 overpayment. This covered the period up to and including 5 April 2022.
17. HMRC sent Miss I another award notice on 20 July 2022, confirming she was not entitled to WTC from 6 April 2022. This is because from 6 April 2022 to 17 August 2022 Miss I had received tax credits of £2,243 which HMRC said she was not entitled to (an overpayment). It is this overpayment that Miss I complains about. She tells us she met her obligations but HMRC did not meet its own obligation. She says that HMRC should write off the overpayment.
20. When we consider a complaint, we look at whether there are signs the organisation got something wrong. We do this by comparing what should have happened with what did happen. We have done this and have not seen any signs that something has gone wrong in this case.
21. Miss I complains about HMRC’s decision to recover a WTC overpayment of £2,243.40 for the 2022 to 2023 tax year. Miss I tells us she spoke with HMRC on the phone on 19 August 2021 and told it that despite ending her employment on 6 August 2021, she was still getting WTC payments. Miss I says HMRC said she did not need to do anything and the overpayment would be corrected in April 2022.
22. As explained above, Miss I says she relied on this information when she carried on getting the tax credit overpayments, so did not take any further action. She understood she had met her obligations as a tax credit claimant.
23. When a claimant is overpaid tax credits, they can ask for the overpayment be set aside (write it off). HMRC will consider whether it can do this under its Code of Practice 26 (COP 26), as set out in its Tax Credits Manual. In brief, COP 26 says that if the claimant met all their responsibilities and if HMRC failed to meet its own responsibilities and this led to an overpayment, it can set the overpayment aside. But, if the claimant has not met all their responsibilities, HMRC may not set the overpayment aside.
24. HMRC said that during Miss I’s phone calls on 8 and 17 June 2021, it had advised her to tell it as soon as she stopped working on 6 August 2021, to confirm that the change of circumstances had happened. HMRC explained that Miss I did not meet her responsibilities set out in COP 26 so she was not entitled to have the overpayment written off.
25. HMRC’s website summarises the claimant’s responsibilities under COP 26, saying:
‘you should:
• give us accurate, complete and up-to-date information • tell us as soon as possible about any changes in income and circumstance, so we have accurate and up-to-date information to reduce the chance of an overpayment happening • let us know as soon as possible if you do not get an award notice within 30 days of telling us about a change in circumstance • check your award notice using the checklist TC602(SN) we sent with it, and tell us straightaway if anything is wrong, missing or incomplete’.
26. Firstly, we considered Miss I’s account that she called HMRC on 19 August and met her responsibilities to report the change in her circumstances. We have carefully considered the information provided by HMRC and the AO to Miss I, and the evidence she gave us. We understand neither HMRC or the AO could find any record of Miss I speaking with HMRC on 19 August.
27. Miss I shared her phone records with us. We can see from these that Miss I called the HMRC tax credit general enquiry line on 19 August. We also note from conversations with Miss I that she spoke with a woman.
28. Unfortunately, HMRC was unable to find a copy of the phone recording and Miss I was unable to give any further evidence that supports her account of what was discussed during that conversation. As HMRC could not evidence what was discussed, specifically that Miss I reported her change of circumstances and she was wrongly advised when she did, it said it could not be satisfied that the conditions of COP 26 were met. As such, it was not able to set the overpayment aside.
29. We thought carefully about this. We cannot say what was discussed, or even what was most likely discussed, during the call on 19 August. The phone records only allow us to say that a phone call was made but we cannot say whether the call was connected to an adviser or what was discussed. We are not accepting one side’s account over the other. Unfortunately, we just cannot say either way what happened. With this in mind, we cannot say that HMRC failed to act in line with COP 26 when declining to set aside the overpayment, because it could not be satisfied that Miss I had met her responsibilities.
30. And, Miss I did not meet her responsibilities after any phone call on 19 August. Claimants have the responsibility to ‘let us know as soon as possible if you do not get an award notice within 30 days of telling us about a change in circumstance’. Any change of circumstances reported on 19 August should have resulted in an award notice being issued in the next 30 days. When Miss I did not get this confirmation of her change in circumstances, she had a responsibility to tell HMRC about this in September 2021 but she did not.
31. Also, when HMRC sent Miss I her annual review for the 2021 to 2022 tax year on 2 May 2022, it asked her to confirm her income and circumstances. As the AO explained in its report, this information asked Miss I to confirm if she was still employed. When Miss I responded to the annual review in July 2022, she confirmed this information was correct.
32. As Miss I did not tell HMRC this information was incorrect, she did not comply with her responsibility under COP 26 to ‘tell us as soon as possible about any changes in income and circumstance, so we have accurate and up-to-date information to reduce the chance of an overpayment happening’.
33. We recognise it would have been upsetting for Miss I to be told that she owed money to HMRC and we are sorry to hear about the stress she experienced when finding out the overpayment could not be set aside. Based on the information we have seen, we think HMRC acted in line with COP 26 when making its decision. We note that HMRC accepted it made an error under the Tax Credit Act 2002 for the 2021 to 2022 tax year and it took responsibility for that error by writing off the overpayment.
34. We cannot see any signs that HMRC failed to act in line with COP 26 when deciding it could not set aside the overpayment from the 2022 to 2023 tax year. This means we will take no further action. We know this complaint is important to Miss I and she feels she has been treated unfairly. We hope our explanation is clear and helpful.
1. We have carefully considered Miss I’s complaint about HM Revenue and Customs (HMRC). We are sorry to hear about the upset and stress Miss I has experienced after finding out she needed to repay money to HMRC.
2. After looking at the evidence available and the relevant guidance that sets out how HMRC should make decisions on tax credit overpayments, we have decided to take no further action. This is because we have not seen any sign that HMRC made any mistakes in the way it reached its decision. We explain our decision below.