4. Mr O complains HMRC has asked him to pay back £1,027.22 tax credit overpayment from the tax year 2004-2005 which he does not believe he owes.
5. He says HMRC previously informed him he repaid the overpayments, and it has now asked him to repay this amount, over twenty years later.
6. He says it has caused him significant distress.
7. As a result of complaining to us, he is seeking financial redress.
8. Mr O received Tax Credits on a joint basis from 2003-04 until the 2005-06 tax year. His joint claim ended on 19 September 2005. Mr O then began claiming Tax Credits on a single basis, as his relationship ended.
9. HMRC overpaid him and his ex-partner joint Tax Credits. It overpaid £2,110.72 for 2003-04, £1,564.16 for 2004-05 and £1,188.98 for 2005-06. In total it overpaid them £4,863.86. As this was a joint claim, Mr O owed HMRC £2,431.93.
10. On 6 September 2011, Mr O set up a payment plan with HMRC for his joint overpayment debts as well as a single claim overpayment for the 2008-09 tax year.
11. On 5 January 2018, Mr O telephoned HMRC and said he wanted to pay off any remaining overpayment debt. He then made two payments of £770.11 for his joint claim and £978.76 for his single claim. He understood this would clear all his Tax Credit debt.
12. Mr O contacted HMRC on 24 January 2019 as he received a letter saying he owed £513.61 in Tax Credit debt for the 2004-05 tax year. HMRC responded at Tier 1 of its complaints process and explained it had not apportioned his payments correctly. It said there was an outstanding payment of £58.12 for 2004-05.
13. HMRC then sent a letter to Mr O on 4 April 2019 informing him that £58.12 was the outstanding balance on his Tax Credits account. It said all other tax years had been cleared.
14. On 5 January 2024, HMRC sent a letter to Mr O. It said he owed £1,027.22 in overpaid Tax Credits for the 2004-05 tax year.
15. Mr O complained at both tiers of HMRC’s internal complaints process. HMRC sent a letter to Mr O on 19 June 2024. It maintained its position that the overpayment is recoverable. In a letter dated 3 September 2024 HMRC acknowledged its poor communication about the overpayment. It apologised to Mr O and offered to pay him £275 to put right the impact.
16. Mr O then complained to the Adjudicator’s Office (AO) on 5 September 2024. This is the next step in the complaints process. It sent its report to Mr O on 12 March 2025. It agreed with HMRC’s decision that he is responsible for the overpayment. It said HMRC had incorrectly calculated the amount he owes, and he instead owes £1,023.72. It recommended HMRC increase the payment for his complaint by £225, so they pay him £500 to recognise its poor communication and the impact this had on him. We understand HMRC has now paid this to Mr O.
Overpayment 19. Before we decide if we should conduct a detailed investigation of a complaint, we look at whether there are signs the organisation has got something wrong. We do this by comparing what should have happened with what did happen. We have done this and have not found any indications that HMRC has done anything wrong in recovering the overpayment.
20. Mr O complains about HMRC’s decision to recover an overpayment in the sum of £1,027.22 for the tax year 2004-2005. He does not believe he owes the money. He has raised concerns about the length of time passed and does not think he should have to pay this money back.
21. HMRC’s Tax Credits Manual, section TCM0224020, explains that tax credits are based on an applicant’s household income and circumstances for the whole of the tax year. If there is a change to this, which claimants are expected to report, HMRC will work out the revised amount of tax credits due for that year. Depending on the extent of the change, and when in the year this is reported, it might mean the applicant is entitled to less over the course of the year, meaning HMRC may have overpaid them.
22. It also makes it clear that a customer who receives an overpayment will be expected to pay it back. There are only a few circumstances where HMRC will set this sum aside using its discretionary decision powers to do so. These are outlined in its COP 26.
23. COP 26 says there are responsibilities for both the claimant and HMRC. HMRC is required to give correct advice based on the information the claimant provides and accurately record and use the information given to it. It has done this.
24. Mr O has also complied with his obligations. He reported changes to HMRC when they occurred, as he let HMRC know about the change in childcare costs, increases to his household income, and his relationship ending.
25. This does not change the fact that there was an overpayment. HMRC overpaid Mr O £2,431.93 for his joint claim.
26. From the information available to us, we can see Mr O set up a payment plan and before January 2018, he had repaid £638.10.
27. In January 2018, Mr O rang HMRC and said he wanted to pay off his outstanding debt. He paid £770.11 and understood this would clear his debt.
28. This means Mr O has repaid a total of £1,408.21 and still owes £1,023.72. As the AO response says, HMRC incorrectly calculated the amount he owes as it said he owed £1,027.22. HMRC has informed us it has now corrected the amount owed and updated DWP to show the amount outstanding.
29. The power to recover an overpayment is given to HMRC in the Tax Credits Act 2002. Section 28 of the Act says ‘where the amount of a tax credit paid for a tax year to a person or persons exceeds the amount of tax credit to which he is entitled, or they are jointly entitled, for the tax year the Commissioners may decide that the excess, or part of it, is to be repaid to the Commissioners’.
30. The Act does not set out a time limit for HMRC to recover the overpayment. So, any debt incurred from an overpayment remains liable for collection and the amount of time that has passed does not affect HMRC’s ability to take action to recover the overpayment. There is no provision in the COP 26 for an overpayment to be set aside on the basis of any delay in HMRC chasing it.
31. In line with this, we consider HMRC is within its rights to recover this debt as it has paid Mr O money he is not entitled to. The evidenced indicates it acted in line with the relevant guidance. We have seen no indications of a failing in HMRC seeking to recover the amount of £1,023.72.
32. We acknowledge that it may seem unfair to Mr O that he is required to pay back an overpayment when he does not believe he was at fault, and given the time passed. We will not consider this aspect of the complaint further.
Inconsistent information provided 33. Mr O also complains about inconsistent information from HMRC regarding what he owes. He tells us that HMRC previously informed him he had paid off his overpayment debt and has now informed him he owes this money, over twenty years later.
34. Upon reviewing the information available to us, we agree HMRC misinformed him on different occasions. For example, in 2018 he asked if he could repay what he owed, so made two payments. This understandably led him to believe he had cleared the debt.
35. HMRC then contacted him on 4 April 2019 about outstanding debt of £58.12. On 5 January 2024, it told him he owed £1,027.22. As the AO response says, the correct amount he owes is £1,023.72.
36. We can see this inconsistency caused Mr O understandable distress and confusion. We acknowledge the distressing impact this had on him, and we are sorry to hear about his experience.
37. During its complaint process, HMRC acknowledged its poor communication and apologised to Mr O for this. It offered him £275 to recognise the worry and distress this caused him. The AO response recommended HMRC to make an additional payment of £225, totalling £500. We understand HMRC has already paid Mr O £500.
38. HMRC’s Complaints and Remedy Guidance sets out that payments made arising from a complaint are intended to recognise the difficulties experienced in addition to any costs incurred. It explains that payments for poor complaint handling will usually be within the range of £25 to £1000, with the majority of these being at the lower end of the scale.
39. Our Principles for Remedy explain when organisations get things wrong, they need to acknowledge and put things right where it is possible. This includes ensuring remedies are appropriate and fair.
40. Our view is £500 appropriately reflects the distress and inconvenience caused to Mr O. We think this is in line with HMRC’s guidance and our principles, as noted above. £500 is on the higher end of the scale, which we think is appropriate due to HMRC misinforming him on multiple occasions, over a lengthy period.
41. We consider this fully remedies his complaint and there is no further role for us in this complaint. We appreciate that it was stressful for Mr O. We hope our decision provides some reassurance, and we wish him all the best for the future.
1. We have carefully considered Mr O’s complaint about HM Revenue and Customs (HMRC). We are sorry to learn about the issues he raised and the difficulties he has faced. We understand this has been a stressful and challenging experience for him.
2. After careful consideration, we have decided to take no further action. We consider HMRC can reclaim the overpaid Tax Credits. Although HMRC made errors in its communication about his Tax Credits, we can see it has taken appropriate steps to put right the impact caused by those mistakes.
3. The complaints we receive give us valuable insight into the organisations we investigate, so we would like to thank Mr O for sharing his experience with us. We appreciate Mr O feels strongly about the complaint. We hope our decision can provide some reassurance.