12 December 2012

Tax Credits Overpayments - suspending recovery during appeals and disputes

There are a number of options available to challenge a tax credit overpayment depending on the circumstances, for instance appealing the decision that led to the overpayment, disputing whether the overpayment should be recovered, asking for an initial explanation of how the overpayment occurred and so on. More information can be found here. 

Where an appeal or dispute is submitted, HMRC will suspend recovery of the overpayment until they resolve the matter. But there are some important points to note. 

When a customer appeals, HMRC set a marker against the award in the tax year that is being appealed and this automatically stops recovery of the overpayment on that tax year. But, in cases where there are other years that have overpayments on them that are not affected by the appeal, recovery of those overpayments will continue. 

When a customer disputes an overpayment, HMRC suspend recovery while they investigate and should not re-start recovery unless and until the dispute is resolved and in HMRC’s favour. HMRC’s policy is that if they re-start recovery in these circumstances, they will not suspend it again unless the customer sends in a new dispute with new information. 

Where customers ask for an explanation of an overpayment, but don’t dispute it, HMRC will not suspend recovery and nor will they during the complaint process, even escalation to the Adjudicator’s Office. Whilst this is the official HMRC policy, it is still worth speaking with DMB to request a suspension as sometimes they will defer recovery whilst you take further action. More about this can be found in our dealing with debt section. 

More information about how to deal with HMRC can be found here .