Tax Credits: Challenging overpayments

Most advisers who deal with tax credits are likely to have dealt with a claimant who has been overpaid. The nature of the tax credits system means that overpayments are a natural part of it and can arise without fault by either the claimant or HMRC. However, some overpayments occur as a result of an error by HMRC or a mistake by the claimant.

There are six options that must be considered when challenging an overpayment. The options are not mutually exclusive, therefore it may be appropriate to pursue one, two, three or all of them, depending on the circumstances of each case.

If a claimant does not understand why they have an overpayment – they should contact HMRC’s  tax credit helpline. An explanation may be given over the phone. In some cases, claimants may need to write to HMRC for a fuller explanation and may need to consider a subject access request. It should be noted that HMRC will not suspend recovery of a debt when a claimant asks for more information/an explanation. Recovery is only suspended when a mandatory reconsideration is lodged (or a subsequent appeal made to the First-tier Tribunal).

The options to challenge an overpayment are:

  1. Appeal
  2. Dispute
  3. Official Error
  4. Complaint
  5. Repayment/hardship
  6. Judicial Review

Last reviewed/updated 27 April 2022