Boost your knowledge, confidence and skills

How to deal with a Tax Credit overpayment

Have you had a letter saying you've been overpaid tax credits? Feeling a bit confused, worried or stressed about it? This guide is here to help you find out more about your overpayment and explain what you can do about it.
How to deal with a Tax credit overpayment
Introduction

If you have received a letter saying you've been overpaid tax credits and demanding repayment you are likely to be confused, worried, and stressed. You may be angry about the system, or at least the failures of it.

This guide will help you find out more about your overpayment and explain what you can do about it. We will guide you through step by step and help you deal with your overpayment with as little hassle as possible.

Who is this guide for?

This guide is for you if you have been told that you have a tax credit overpayment that you have to pay back.

You may not be sure if you even have an overpayment. You may just have noticed a worrying drop in the amount of money you are getting from tax credits. We will show you how to find out if the reduction is because you have an overpayment.

Can you spare a few minutes?
We would be grateful if you could tell us what you think of this information by completing our Feedback survey. We will use your feedback to improve our guides, inform our future work and seek funding.

Disclaimer

The information in this guide applies to England and Wales and is for general purposes only. The law may be different if you live in Scotland or Northern Ireland.

The law is complicated. We have simplified things in the guide to give you an idea of how the law applies to you. Please don't rely on this guide as a complete statement of the law or as a substitute for getting legal advice about what to do in the specific circumstances of your case.

The quotes and cases we refer to are not always real but show a typical situation. We hope they help you think about how to deal with your own situation.

Acknowledgements
This guide was written by Victoria Todd of the Low Incomes Tax Reform Group and edited and produced by Law for Life's Advicenow project. Advicenow would like to thank all those who provided feedback on this guide. 

July 2013
What is a tax credit overpayment?

Middle aged man smiling in DIY shop. Photo by Walter ScottThere are two tax credits, working tax credit and child tax credit. In this guide we use the term ‘tax credit’ or ‘tax credits’ to refer to either or both of them. A tax credit overpayment happens when you have received more tax credits than you should have in a tax year. (A tax year runs from April 6th in one year to April 5th of the next year.) After the end of every tax year, HMRC check to see if they have paid you the right amount for the year just ended. If they have paid you more than they think you should have had, you will have a tax credit overpayment.

You may feel panicked by the whole situation, but try not to worry. By following the steps in this guide, we can help you through it. If you are unsure, or would like someone to check your overpayment or help you with an appeal or dispute then get advice. See How to find an adviser.

Who is your letter from?

Tax Credits are dealt with by Her Majesty’s Revenue and Customs (HMRC).

Most of your letters will probably come from the Tax Credit Office (TCO). They are the part of HMRC that decides if you get tax credits. They also pay your tax credits. If you have any problems, the Tax Credit Office will be the people you write to and who make decisions about overpayments.

If you phone the tax credit helpline, you will speak to the HMRC ‘contact centre’. They answer queries about tax credits.

Sometimes you might get letters from other parts of HMRC about your tax credits. If the Tax Credit Office think you have to pay back some of your tax credits, they will usually ask the ‘Debt Management and Banking’ part of HMRC to do this. Their job is to collect money that is owed to HMRC.

HMRC occasionally use private companies to do work for them. They do this to recover debts and sometimes to investigate claims further. You may get a letter from one of these companies. If you have any doubt, you should contact HMRC to confirm the letter is genuine.

How do I know if I have been overpaid?

It sometimes isn’t easy to tell whether HMRC think you have been overpaid. You might receive a letter from HMRC telling you that you have been overpaid. It might also tell you how much the overpayment is and that you must pay it back straight away. Or, you might not receive a letter and instead, your tax credit payments may go down. If HMRC think you have been overpaid, they will say so on your tax credit award notice. These notices are the pages that HMRC send you after your first claim and again every time you report a change to them. They are normally 4-8 pages long and on the front have your name, address and the amount of your tax credits. Overpayments are normally shown in Part 3 next to where it says ‘amount due from you’.

Example of part of an award notice showing an overpayment of £200:

 Part 3
 Amount to be paid
£226.87Working Tax Credit
£5,774.16Child Tax Credit
£6,001.03Total. See Part 2 for details.
 Minus
£6,529.85Payments already made by us
£100.00Amount of overpayment from earlier years already collected from payments made so far
 Plus
£100.00Amount you have paid back to us for this award period
£0.00Amount due to you
£128.82Already collected from you
£200.00Amount due from you
£0.00Total due to you
 Overpayment
We intend to collect this back from future award(s) by reducing your payments under section 29(4) of the Tax Credits Act 2002.

If you are still not sure if you have been overpaid, don’t worry. The notices they send are sometimes very hard to understand. Take your notice along to an adviser (see How to find an adviser - tax credits) or contact the tax credit helpline on 0845 300 3900 (textphone: 0845 300 3909).

Why have I been overpaid?

There are many reasons why overpayments occur. It surprises a lot of people to find out that you can have a tax credit overpayment even if you do everything correctly.

Tax credits are designed to pay out first and double check the amount later. This means it is not certain that what you are getting is right. Remember those forms you receive every summer? Once the tax year ends in April, HMRC send you those forms to ask you to give them your actual income and confirm your details. Only then can they tell you how much you were really entitled to for the year that has just finished.

Sometimes you may have been overpaid even though your income or circumstances haven’t changed. Overpayments like this can occur when you don’t return the forms (called ‘renewal’ papers) to HMRC or you don’t report that you have become part of a couple because you would be entitled to the same amount.

Look at your award notices

Look back at your award notices and check the details on them. If any of them are wrong, this might help explain why you were overpaid. In particular, make sure the following are correct:

  • Your National Insurance number(s) - if you are making a joint claim, there will be two numbers
  • The number of hours worked
  • Your income - this year and last year
  • Whether you have a partner - if you do, you should be claiming as a couple. This means that both sets of details should be on the award notice
  • The number of children you have
  • Whether you are disabled and qualify for the disability element. (Disability for tax credits is different to disability for other things. It is important to check that you meet the tax credit disability conditions.)
  • Whether you or a child claim Disability Living Allowance at the higher care rate or the enhanced daily living component of the Personal Independence Payment.
  • Whether you claim the highest rate of Attendance Allowance.
  • Childcare costs
  • The payments listed at the end match what you were actually paid (check against your bank statements)

If you have checked all these details and think HMRC have got them right, look at the ‘Common reasons’ section below. Does one of them apply to you?

Common reasons

Here we explain the most common reasons for overpayments, as well as how to find out if this is the cause of your overpayment.

1. Your income has gone up

HMRC may have paid you too much because they thought your income is lower than it actually is. Normally, if your income for this year is no more than £5,000 higher than it was last year, your award will not be affected. But there are still some rises in income that are not covered by that ‘buffer zone’. See point 8 below.

The amount your income can increase from one year to the next before it affects your tax credit award has varied a lot in recent years. In the tax years 2003-2004, 2004-2005 and 2005-2006 you were allowed a rise of only £2,500. For 2006-2007, 2007-2008, 2008-2009, 2009-2010 and 2010-2011 the figure was £25,000. For 2011-2012 and 2012-2013 you were allowed a rise of £10,000 before it affected your award.

To check for this you should look back at your award notices. Look at the income used and see whether you told HMRC your income was higher. It is always best to let HMRC know if your income is going up, even if it is by less than £5,000. That is because HMRC need to know what your income really is in order to pay you the right amount next year.

2. HMRC did not act on what you told them

You might have told HMRC about a change in your circumstances. (For example, that your son has left school, or that you are no longer working.)

If HMRC didn’t change your award straight away, you may have carried on receiving too much money. This will become an overpayment once the change is actually made.

When you report changes, it is a good idea to write down who you spoke to and when. If you haven’t done this don’t worry. Have a look on your award notices to see if the changes were made at the right time.

HMRC have 30 days to make a change once you tell them about something.

If they take longer than this, they should not ask you to repay any overpayment which builds up after the 30 days (unless they sent you a new award notice and you didn't tell them of their mistake within 1 month).

See I don’t think I should pay the money back: the dispute process for information about HMRC's responsibilities.

3. HMRC made an official error

If you miss the appeal time limit but think HMRC are wrong about the amount of tax credits they have given you because they have made a mistake you can ask them to look at it again. This kind of mistake is called 'official error'. The time limit for asking that the error is investigated is longer than the one for appeals. See Official error. You can send a dispute and official error request at the same time.

These overpayments are hard to find on your award notices. If you think that HMRC may have made a mistake on your award, you should try and get some advice. See How to find an adviser - tax credits.

4. Disability error

This mistake often happens when people are confused about what rate of Disability Living Allowance or Personal Independence Payment they receive.

There are questions on the claim form that ask if you or a child receive Disability Living Allowance at the higher care rate or the enhanced daily living component of the Personal Independence Payment. If you tick these boxes, HMRC award you extra tax credits because of your severe disability. If it later turns out that you were receiving a lower level of Disability Living Allowance or Personal Independence Payment, HMRC will take back this extra amount.

Check your award letter from the Department of Work and Pensions. This will tell you what level of Disability Living Allowance or Personal Independence Payment you receive.
Or you could phone the DWP Disability Benefits Helpline on 08457 123 456.

Then check your tax credit award notice to see if it says you are in receipt of Disability Living Allowance or Personal Independence Payment and at what rate. It should match the rate on your Disability Living Allowance or Personal Independence Payment award letter. Similar rules apply if you are receiving Attendance Allowance.

5. HMRC say you didn’t send back forms

After April each year, HMRC send out renewal forms. These forms ask you what your income was in the year that has just finished. They also ask you to check that your details are correct. The form is your claim for the new tax year. If the form is not sent back to HMRC by the correct date, it can mean that your current tax credit award ends. All of the payments you have received since April will be treated as overpayments even if you would have been entitled to them if the forms had been sent back.

If you separated from your partner in the last tax year or early in the current tax year, you will each have to return a set of forms.

If you have gone on to make a new claim in just your name, you have to return forms for your old joint claim AND forms for your new claim.

Check your letters from HMRC. If your award ended because you did not renew you should have received a letter called a ‘statement of account’. This tells you that your tax credits have ended.

If you contact HMRC within 30 days of getting the statement of account letter, they should be able to renew your claim over the phone. This will cancel the overpayment.

After 30 days, you can only get your tax credit payments back into payment if you have a good reason why you did not renew. For example, because you were seriously ill, or your partner was seriously ill and you could not get someone to act on your behalf in time. Otherwise, you will be left with an overpayment to deal with even if you would have been entitled to the money if the forms had been sent back.

6. Wrong details on your award notice

If any of the details about you on your award notice were wrong, it might mean that HMRC have paid you too much in tax credits. This is why it is important to check your award notice each time you receive it and tell HMRC if there is a mistake. For example, maybe HMRC paid you for three children when you only have two.

Check all the details on your award notices to see if you can find anything wrong or anything that you told HMRC about but they did not do anything about.

7. Becoming part of a couple or splitting up with an ex

When you become part of a couple you need to tell HMRC straight away. You also need to tell them if you split up and are no longer part of a couple Your tax credit award normally ends on the date when your personal circumstances change. If you delay telling HMRC, everything you receive after that date will be an overpayment. Deciding whether you are part of a couple for tax credit purposes can sometimes be difficult. You should contact HMRC if you are unsure about this and make sure you keep a record of the phone call including the date, who you spoke to and what they said.

Check your award notice to see if you are claiming as a single person or with a partner. If you are claiming with a partner, their details should show on your notice.

This is a complicated area. If you have an overpayment because of this you should get advice. See How to find an adviser - tax credits.

If you were late telling HMRC about a partner moving in or leaving and you went on to make a new claim straight away as a newly single person or couple, you might be able to have your overpayment reduced. See I was late telling HMRC about my partner for more information.

8. Income goes down

Tax credits are paid using your previous year’s income. If you think your income will be lower this year, you can ring HMRC and ask them to pay your tax credits on your new estimated income for the current year. This often means your tax credits will go up. They will only change the award if the fall in income is more than £2,500. If it is less than this your award will be paid using your previous year's income.

But if later in the year your income goes up again, it can mean you have an overpayment. This is caused by the way tax credits work out income across a full year instead of weekly or monthly.

Have a look at your award notices to see what income was used to calculate your tax credits. If you gave an estimate, you should see the word ‘estimate’ next to your income.

The later award notices will then show a higher income.

I still don’t know why I’ve been overpaid. What can I do?

In circumstances where you still don’t know the cause of your overpayment you can:

1. Get advice. See How to find an adviser - tax credits. This is often the best action to take if you don’t know why you have an overpayment so that you do not miss any important time limits.

2. Write to HMRC and ask them for an explanation. See Further help - tax credits  for the address. However, it often takes a long time to get an explanation and when it does arrive, it’s often very hard to understand or wrong. You might also miss important appeal and dispute time limits while you are waiting. Asking for an explanation doesn’t alter the overpayment and you will need to speak to HMRC about paying it back in the meantime. See Repaying the overpayment. If HMRC are reducing your tax credits to collect the overpayment, they will keep doing this even though you have asked for an explanation.

3. Send both an appeal and a dispute to HMRC. This way you don’t miss any important time limits. If you do this, HMRC won’t ask for the money back until they have answered your appeal. For information see How to appeal. For information about the dispute process see I don’t think I should pay the money back: the dispute process.

I have been told that I have been overpaid. What can I do?

Once you know that HMRC think that you have been overpaid you have different options depending on whether they are asking you to pay the money back straight away or taking it from your tax credits.

If HMRC have sent you a letter asking for the money back straight away, look at A below. If HMRC are taking money back from your tax credits, have a look at B.

A - HMRC are asking for the money back straight away

If HMRC want the money back straight away (they call this ‘direct recovery’), they normally send you a letter. The letter will tell you that you were paid too much. It should also tell you the amount you have to pay back. If you get a letter like this, you have several options.

1. If you don’t agree that HMRC should ask you for the money back (perhaps because the overpayment was caused by their mistake or because they didn't change your award when you told them your situation had changed), you can write to them and ask them to think again. This is called a ‘dispute’. See I don’t think I should pay the money back: the dispute process. HMRC will not stop asking for the money while they look at your dispute. You will need to talk to Debt Management about repaying the overpayment if you have received a letter asking for it directly. See Repaying the overpayment. If your dispute is successful you should get any payments you have made refunded to you. There are time limits affecting how long you have to start a dispute. For information about time limits for disputes see Appeals and disputes.

2. If you think HMRC are wrong about the amount of tax credits they have given you, and that you weren't overpaid or that your overpayment is less than HMRC think you can appeal the decision. An appeal is when you ask HMRC to look at this kind of decision again. For more information about appeals see Appeals and disputes and How to appeal. If you do this, HMRC will stop asking for the money they say you owe them until they have investigated and replied to you. There are strict time limits for appeals. For more information about time limits for appeals see Appeals and disputes.

3. You can start an appeal and a dispute at the same time if you are not sure which route is the right one to take or if your overpayment has more than one cause.

4. If you agree that the overpayment should be paid back but cannot afford it, you should still speak to HMRC straight away. See I can't afford it.

5. Accept the overpayment and agree to pay it back. You should contact HMRC directly about how to do this. See Repaying the overpayment.

6. If you have an overpayment because you were late telling HMRC about a change in your circumstances, for example, your partner moving in or out and you went on to make a new claim then you may be able to get your overpayment reduced. See Appeals and disputes for more information.

7. Get advice to help you decide what to do. See How to find an adviser - tax credits.

B - HMRC are taking back the overpayment from my tax credits

If your tax credits have gone down, HMRC might have started taking money back to repay an overpayment. If this has happened, you won't receive a letter telling you that you have an overpayment. Instead your award notices will show the overpayment and how much HMRC are taking back from you. There is an example of an award notice in the section How do I know if I have been overpaid? It shows you where to look for this information.

If you cannot find the information about your overpayment on your award notice, try and get some help from an advice agency or contact the tax credit helpline. Even though HMRC have started collecting the money there are still things you can do.

1. If you don’t agree that HMRC should ask you for the money back (perhaps because the overpayment was caused by their mistake or because they didn't change your award when you told them your situation had changed), you can write to them and ask them to think again. This is called a ‘dispute’. For information about disputes, see I don’t think I should pay the money back: the dispute process. HMRC will not stop asking for the money while they look at your dispute. See Repaying the overpayment. If your dispute is successful you should get any payments you have made refunded to you. There are time limits affecting how long you have to start a dispute. For information about time limits see Appeals and disputes.

2. If you think HMRC are wrong about the amount of tax credits they have given you, and that you weren't overpaid or that your overpayment is less than HMRC think, you can appeal the decision. An appeal is how you ask HMRC to look at this kind of decision again. If you do this, HMRC will stop asking for the money until they have investigated and replied to you. There are strict time limits for appeals. See Appeals and disputes.

3. You can start an appeal and a dispute at the same time if you are not sure which route is the right one to take or if your overpayment has more than one cause.

4. Ask HMRC to take less money from your tax credits if the reduction is causing you difficulty. For more information on what to do if you cannot manage with lower payments see I can't afford it.

5. Do nothing. HMRC will continue reducing your tax credit payments until the overpayment is paid back.

6. Get advice to help you decide what to do. See How to find an adviser - tax credits.

I was paying money back from my tax credits, but now I've received a letter asking for the money straight away. Why?

This normally happens because your tax credit claim has ended for some reason. This might be because you have become part of a couple or you are no longer working. It can also happen if your income increases so that you no longer receive any payments. HMRC call this a 'Nil award'.

HMRC can only take money from your tax credits to pay back an overpayment that happened on the same claim. Once the claim ends, they have to ask you to repay the money straight away. Even if you have made a new claim, HMRC will still write to you asking for the money from the old claim.

Why claims end

Your tax credit claim might have ended because:

  • Your child has left home
  • Your child has left full time education
  • Your child has died
  • You have stopped being part of a couple
  • You have become part of a couple
  • You or your partner went abroad for more than 8 weeks, or 12 weeks in some circumstances
  • You were no longer working enough hours to qualify
  • You no longer have a ‘right to reside’ in the UK
  • You did not send back your renewal forms, or your forms have been lost.

If you have more than one overpayment

From August 2009, if HMRC are taking money from your latest tax credits claim for one overpayment, they should not write to you and ask for money for another overpayment from an older, different claim. They should wait until you have repaid the first overpayment before asking you for money towards the next one. Remember though this only happens if the overpayments are from different claims. If you think this should apply to you, contact Debt Management and Banking using the phone number on the letter asking you to pay the money back. Ask them to stop asking you for the money from your old claim until you have finished paying back the overpayment on your latest claim.

Court action or distraint

If you have received a letter from HMRC which says that they are taking you to court or you have received court papers then you should contact HMRC straight away. Ask them to stop the court action if it is not too late and talk to them about setting up a re-payment plan. See Repaying the overpayment.

Sometimes, instead of taking you to court, HMRC will write to you saying that they plan to take away some of your possessions and sell them at auction. This is called ‘distraint’ or ‘distress’. If this happens, you should contact HMRC straight away. Ask them to stop the distraint action if it is not too late and talk to them about setting up a re-payment plan. See Repaying the overpayment.

This will give you time to look at the rest of this guide and decide what to do. If it is too late and the case has already gone to court you should get advice as soon as possible. See How to find an adviser - tax credits.

Appeals and disputes

It can be tricky deciding what route to take when you want to object to a decision made by HMRC. It is the type of decision that determines whether your objection goes through the dispute process or the appeal process. Not every decision by HMRC can be appealed.

What is an appeal?

You can appeal a decision when you don’t think there is an overpayment because you think HMRC have got the calculation wrong (not just unfair). An appeal is how you ask HMRC to look at this kind of decision again. For information about how to do this see How to Appeal.

You might appeal if you think HMRC are wrong about the amount of tax credits they say they should have given you. You will need to tell HMRC why you think it is wrong. If you do not accept their decision, you can present your case to a panel of three people (a tribunal) who are independent and do not work for HMRC. They will then make a decision.

What is a dispute?

You can dispute a decision when you agree there has been an overpayment but you don’t think you should have to pay it back. The dispute process is how you ask HMRC to look at this kind of decision again. Disputes are decided by HMRC; they don’t go to a tribunal.

So, you may have received more tax credits than you should have. If you agree that this is true, and that the information HMRC have about you is correct (for example how many children you have, your disabilities, and whether you are a couple), you have been overpaid. You can’t appeal when they ask you to pay this money back, but you can ask them not to make you pay it back by using the dispute process. For information about how to do this see: I don’t think I should pay the money back: the dispute process

Doing both

Sometimes you might want to do both - send an appeal letter and a dispute letter at the same time. You may want to do this if you are not sure why you have been overpaid. If you don’t know the cause or aren’t sure, then you can’t be certain which process is the right one for you to use. So to protect yourself you can do both. It’s also possible that the overpayment has two causes – one appealable and one disputable.

Appeal and disputes: the differences

Appeal

You should appeal if HMRC have worked out your tax credit award incorrectly or decided that you are not entitled to part of or all of your tax credit award and you do not agree with this.

Daisha claims tax credits for her 3 children. Her eldest child finished her GCSE’s but decided to stay on at school to do her A levels. Daisha told HMRC and continued to receive tax credits for 3 children. When HMRC work out Daisha’s final tax credits for the year, they only included 2 children. Because Daisha received money for 3 children, HMRC thought that they had overpaid her. Daisha appealed the decision and asked HMRC to change her award as she should have received tax credits for 3 children. If she is successful, the overpayment will disappear. Daisha was right to appeal.

Dispute

You should dispute if HMRC have the right information about your income and situation, but for some reason you were paid more than you were entitled to.

Eric and his wife have 2 children but were paid tax credits for 3 children. When Eric received his award notice, he phoned HMRC to tell them they had the number of children wrong. HMRC did not correct the mistake and kept on paying Eric too much tax credit. At the end of the year, Eric had received more tax credit than he should have and so had an overpayment. Eric used the dispute process because he didn’t think he should have to pay it back because he told HMRC of the mistake as soon as he saw his award notice. Eric was right to dispute.

What can I do?

I don’t think I was paid too much.

You can appeal. See How to appeal. If you have missed the appeal time limits you might be able to make an 'official error request'. For more information see Official error.

I agree I was paid too much but I don't think I should have to pay it back.

You can send a dispute letter. See I don’t think I should pay the money back: the dispute process.

I agree I was paid too much, but not as much as HMRC say.

You can send an appeal about the amount that HMRC say you owe that you don’t agree with. See How to Appeal. If you have overpayments from other years that you are not appealing then you should either start paying them back (see Repaying the overpayment) or send a dispute letter if you don’t think you should have to pay them back. See I don’t think I should pay the money back: the dispute process.

I was overpaid because I was late telling HMRC that I had become part of a couple or stopped being part of a couple.

If you are overpaid because you were late telling HMRC you had become part of a couple or stopped being part of a couple or your partner had died, you may be able to have the overpayment reduced. When you tell HMRC about a change like this, your claim ends and you have to make a new claim as a single person or as part of a new couple. If you report the change late, this usually results in an overpayment on your old claim. Many people then get a surprise when they find out that they cannot backdate their new claim for more than 1 month. However, the rules changed on 18th January 2010 and now HMRC will reduce any overpayment on an old claim by the amount you would have received if you had made your new claim on time. This is called ‘notional entitlement’. They will do this in most cases, except where they believe someone was deliberately dishonest.

If you think this might apply to you, contact the HMRC tax credit helpline on 0345 300 3900 (Textphone 0345 300 3909) and ask for your case to be passed to the ‘notional entitlement’ team (sometimes also called ‘notional offsetting team’). They will calculate whether your overpayment should be reduced. If you are not sure whether this applies to you, get help from an adviser. See How to find an adviser - tax credits.

I don’t understand this at all and want HMRC to explain it to me

Follow the steps explained at How to Appeal and I don’t think I should pay the money back: the dispute process and send two letters to HMRC. This way you won't miss any deadlines. You can also get help from an adviser. See How to find an adviser - tax credits.

Time limits for appeals

You must send your appeal to HMRC within 30 days of the decision you want to appeal against. The decision is normally the award notice that sets out your tax credits award. The 30 days runs from the date on the award notice.

If you miss the 30 day time limit, don’t panic. If you can show a good reason why you missed the deadline, you can ask for an appeal up to 13 months after the date on the notice or decision letter. If HMRC refuse to accept that you had a good reason, they must send the case to a Tribunal which is made up of people outside of HMRC. See How to find an adviser - tax credits to get help with your appeal.

Award notices can be difficult to understand and the first you may know that you have an overpayment is when you receive a demand letter from HMRC asking for the money back. You may have missed the appeal time limits because they run from the date of the original award notice, not the date HMRC write to you asking for the money back.

If that happens, don’t panic. If your award is wrong because HMRC made a mistake and you didn’t cause them to make that mistake in any way, you may still be able to have the award changed up to five years from the tax year where the mistake happened. This is called an ‘official error request’. See Official error.

Time limits for disputes

Before 6 April 2013, there was no time limit for sending in a dispute. HMRC changed this from 6 April 2013 and now you must normally dispute overpayments within 3 months.

Warning!
A time limit for disputes was introduced in April 2013. We do not yet know all the details about how the time limit will work. Please check the latest version of COP 26 for more information - Tax credits: what happens if you've been paid too much (COP26).

Even if your award notice says you only have 3 months to dispute and you think you have missed the time limit, you should still send in a dispute until the rules about the time limit are made clearer by HMRC.

The 3 month time limit is confusing and it might not be easy to tell whether you are still within the limit. It is especially confusing if you have overpayments from different tax years showing on one award notice.

You should get some advice if you think the time limit might apply to you. If you have any doubt, the best thing to do is to send a dispute anyway. If HMRC refuse to accept the dispute because they say you have missed the time limit, you should seek advice (see How to find an adviser - tax credits) to make sure HMRC are right because the time limit rules are unclear.

What if I miss the 3 month time limit?

HMRC may still look at your dispute if you have a good reason for missing the time limit. For example, if you received wrong advice from the HMRC’s own helpline or if you have been seriously ill. If you think you have a good reason, you should include it at the start of your dispute letter.

What if HMRC refuse to accept my dispute?

If HMRC say they will not look at your case because you are outside the 3 month time limit and you think that you were within it or you had a good reason for missing it you should follow the guidance about How to complain - tax credits. (You still need to speak to HMRC about repaying the money even if you decide to make a complaint.) In your complaint letter you should make it clear why you think you did not miss the deadline. As the time limit is new from April 2013, HMRC have not given full details about how it will work in all situations. If they refuse to accept your dispute because they say you missed the deadline, you should speak to an adviser to make sure HMRC have applied the time limit correctly. See How to find an adviser - tax credits.

Be aware! HMRC will keep asking for the money

Normally, HMRC will not stop asking you to pay back your overpayment when you dispute a decision or complain. They will only stop when you send in an appeal. You might need to start making payments while you go through the complaints system. For information on how to do this see Repaying the overpayment.

Get Advice

Tax credits are very complicated and most claimants find it difficult to understand overpayments. If you are unsure, or would like someone to check your overpayment or help you with an appeal or dispute then try and get advice. See How to find an adviser - tax credits.

Speak to your MP

Your local MP might be able to help you with your overpayment. This can be especially helpful in cases where you are not getting any response from HMRC. See Further help - tax credits  for information about how to contact them.

How to appeal

If you decide to send an appeal to HMRC you can either:

  • Write a letter

Whichever method you choose, make sure that your appeal includes:

  • Your name (and, if you have a partner, their name)
  • Your date of birth (and your partner’s)
  • Your national insurance number (and your partner’s)
  • The date of the decision you wish to appeal
  • A brief explanation of what you think they have got wrong.

Keep a copy of your letter or the completed form, and make a note of the date you sent it. If you can, you should send all letters to HMRC by recorded delivery and keep hold of the postal receipt. If you have used recorded delivery you can check the Royal Mail website to see if HMRC have signed for the letter and print a copy of the receipt. If it has been not been signed for, it is a good idea to send it again.

See Further help - tax credits for details of where you should send your appeal to.

When should I hear from them?

Don’t worry if you don’t hear anything for a while. If you have not received anything after 3 months, you can complain. See How to complain - tax credits. If you have still not heard anything from HMRC after 6 months, or if you are not receiving any payments and it is causing you financial difficulties, you should contact an adviser to see if your case can be sent directly to a tribunal. Tribunals are not part of HMRC; they are independent. See How to find an adviser - tax credits.

As soon as HMRC receive your form or letter, they must stop asking you for the money back. They should not ask you for the money again until they have made a decision about your appeal or if they don’t agree with you until your appeal has been heard by an independent tribunal.

Sometimes you may receive a demand letter asking for the money back from another part of HMRC called Debt Management and Banking. This is normally because the Tax Credit Office hasn’t told them about your appeal. If this happens you should write to Debt Management and Banking. Send them a copy of your appeal letter and tell them that they should not try and recover any overpayment that is under appeal.

What if HMRC ask for more evidence for my appeal?

Sometimes HMRC may write to you after you have sent an appeal letter asking you for more evidence to support your appeal. Their letter may be negative and tell you that the appeals process is long and it could be some time before your appeal is heard.

HMRC might also telephone you to discuss your appeal and tell you that your appeal does not have much chance of success. Speak to an adviser first before deciding to give up (withdraw) your appeal (see How to find an adviser - tax credits). Once a valid appeal has been made, HMRC must send the case to an independent tribunal outside of HMRC if they do not agree with your appeal. You do not have to submit extra evidence, although if you do have any further information it is a good idea to send it to HMRC.

What do I do if HMRC do not agree with my appeal?

You should receive a letter from HMRC. This should tell you if they agree with you.

If they do not agree with you, they should send your appeal to be looked at by three people who do not work for the HMRC. This is a tribunal. It is a good idea to try and find someone to help you as soon as you get to this stage. See How to find an adviser - tax credits

Sometimes, HMRC may only partly agree with you. They may agree that you weren't overpaid by as much as they initially said, but still think you've been overpaid by a smaller amount. Because you can’t agree everything, HMRC must send the appeal on to the tribunal.

What if I miss the time limits for appealing?

The time limits for appeals are explained on Appeals and disputes. If you miss the 13 month time limit for showing good reason why you missed the normal 30 day deadline, you may be able to have your award changed by making an ‘official error request’. See Official error. This is helpful if your award is incorrect. If your award is correct but you don’t think you should have to pay the money back you should look at how to dispute the decision. SeeI don’t think I should pay the money back: the dispute process.

Official error

What is official error?

Official error is different from an appeal or dispute. If you are within the time limit for an appeal (see Appeals and disputes) then it is best to appeal instead of using the official error route. But if you have missed the time limit then you might be able to make an official error request.

For a mistake to count as an official error, you need to show three things:

1. That HMRC made a mistake which led to the incorrect award

2. Changing the award would be in your favour

3. The mistake was mostly HMRC’s fault

How do I make an official error request?

You should send a letter explaining why you think official error applies and asking HMRC to stop recovering your overpayment until they make a decision, to:

CSSG
Tax Credit Office
Preston
PR1 4AT

When you send your letter it is best to send it recorded delivery. If HMRC carry on asking for the money back or taking it from your tax credits, have a look at the guidance on Repaying the overpayment.

How long have I got?

You have five years from the end of the tax year in which the overpayment occurred to ask HMRC to change your incorrect award.

What if HMRC don’t change my award?

If HMRC refuse to change your award after you have sent an official error letter, you normally cannot appeal. You should speak to an adviser if this happens. See How to find an adviser - tax credits.

I don’t think I should pay the money back: the dispute process

If the overpayment is correct, you can ask HMRC not to take the money back from you if you think it was their mistake that caused the overpayment. The process for doing this is called a ‘dispute’. You can do this even if you can’t appeal. You can also use the dispute process at the same time as an appeal if you are not sure why you have an overpayment.

From 6 April 2013 there is a 3 month time limit for disputes. For more information about time limits for disputes see Appeals and disputes.

The dispute process is explained in the HMRC leaflet COP 26 (you can find it here: Tax credits: if you think a decision is wrong (WTC/AP) or phone the tax credit helpline on 0345 300 3900 (Textphone 0345 300 3909) and ask for a copy).

There are two ways to lodge a dispute. You can use a form which you can find here: Tax credits: overpayment (TC846) or you can write a letter. See How to write a dispute letter.

Before April 2013, when HMRC received a dispute they stopped asking you to pay the money back until they had made their decision. From April 2013, HMRC will keep asking you for the money or taking it from your tax credits even if you dispute their decision. If this causes you hardship, see I can’t afford it I can't afford it.

How do HMRC decide if I have to pay the money back?

Martha’s story

Martha claimed tax credits for her two children. She told HMRC on 1st October that her oldest son had left home that day. HMRC did not do anything when she told them. Instead they kept on paying her the money for her son for 4 months and didn’t send Martha any new award notices. When they did make the change, they decided Martha had been overpaid because she had received more money that she should have. Martha sent a dispute letter to HMRC. HMRC decided that they had not met their responsibilities, and that Martha had met hers because she told them straight away about her son leaving home. As a result Martha didn’t have to pay back the money, except for the first 30 days. This is because HMRC have 30 days to make a change that you report.

When your dispute form or letter is received, HMRC will decide if you have to pay the money back. They can make one of three different decisions:

  1. They can decide you have to pay all of the money back.
  2. They can decide you have to pay some of the money back.
  3. They can decide that you do not have to pay any of the money back.

HMRC make their decision by checking if you have done certain things. HMRC call these your ‘responsibilities’. They also check to see if they have done what they were supposed to do. Have a look at the chart below to see a full list of the things you and HMRC have to do.

  • If you have done everything you were supposed to and HMRC have not, you will not have to pay back the money.
  • If you have not done everything you were supposed to, but HMRC have, then you will have to pay back the money. If there was a good reason why you could not meet your responsibilities, HMRC might not ask for the money back. This is called ‘exceptional circumstances’. You should write a letter to HMRC telling them the reasons why you could not meet your responsibilities.
  • If you have not done everything you were supposed to, but neither did HMRC, then you may only have to pay some of the money back.
HMRC's responsibilitiesYour responsibilities

They have to give you the right advice based on the information you give them.

You must give them correct and up-to-date information.

They shouldn't make any mistakes in working out how much you should get and paying it to you (unless you give them wrong information).

You should tell them about any change to your circumstances. You must report certain changes within one month.

If you tell them about a mistake on your award notice, they should correct it and send you a new award notice.

Every time you get an award notice, you should check everything is correct. Use the checklist that comes with the notice to do this. If there is a mistake, you have to tell them within one month. (It is helpful to keep a note of when you tell HMRC of a mistake).

If you tell them about a change (like a different job, or someone moving in or out) they should change the amount you get within 30 days (provided you have given them all the information they need).

You should check that the payments you get are for the same amount as it says on your award notice.

Evidence

Very often, HMRC say that you have to pay money back because they cannot find any proof that you met your responsibilities. For example, they may say that they cannot find any evidence that you told them about changes to your situation. When you write your dispute letter you should try to remember when it was that you contacted HMRC. If you cannot remember, you can ask HMRC for a copy of your telephone calls and their notes about you. You can do this by writing to:

TCO SAR Team
Group 7
Area F
Floor 1 St Marks House
St Marys Street
Preston
Lancashire
PR1 4AT

They do not always have copies of everything, but it may help your dispute. For example, HMRC did not record all telephone calls from January 2003 to September 2004. If you think you told them about something during this time you should give as much information as you can remember. HMRC should accept what you say unless they have any proof that you are wrong. 

Do not wait to get copies of their notes about you before you send a dispute. This is because HMRC will not stop asking you for the money and you may miss the 3 month dispute time limit.

How to write a dispute letter

What you need to do

Example

1. Make sure you send it to the right address.

Dispute Team
Tax Credit Office
Preston
PR1 0SB

2. Tell them who the letter is about. Include your name, your partner’s name, your address and both national insurance numbers.

I am writing to you on behalf of myself (Mrs Helen Smith) and my husband (Mr Dale Smith). Our address is 10 The Street, The Town, N1 7ET. Our National Insurance numbers are AB 12 34 45 D (Mrs Smith) and EF 12 34 45 G (Mr Smith).

3. Next you need to tell them what overpayment you are asking them to look at and which year it is from. You should be able to find this information on the letter that HMRC sent you about the overpayment (or if you did not receive one, from your last award notice). If you cannot find it, don’t worry. You can ring the tax credit helpline and ask them which year the overpayment is from. From 6 April 2013 there is a 3 month time limit for disputes. For more information about the time limit for disputes see Appeals and disputes. If you have missed the time limit you should explain here why you missed it.

If you have an overpayment from more than one year, keep each one separate in your letter and follow the steps for each.

We would like to dispute our tax credit overpayment for 2008-2009.

We would like to dispute our tax credit overpayments for 2012-2013 and 2013-2014.

2012-2013

Follow steps 4 to 7

2013-2014

Follow steps 4 to 7

4. You now need to tell HMRC why you think you should not pay back the overpayment. Have a look at the responsibilities in this section  I don’t think I should pay the money back: the dispute process. You should look at each one and see if it applies to you. Tell HMRC why you think you met your responsibilities.

I think that we should not have to pay back our overpayment because we met all of our responsibilities.

I rang the helpline straight away when our son left home. This was around October 2007. The lady at the helpline told us she would make this change on our claim.

I rang the helpline in January 2008 when my husband got a pay rise. I told them that his new income was £13,000. We then got lots of papers through the post and I noticed that they had put his income as £1,300 which was wrong. I phoned the helpline straightaway to correct this.

5. Then tell HMRC why you think they did not do the right thing. Have a look at their responsibilities here I don’t think I should pay the money back: the dispute process. You should look at each of these and see if it applies to you. Tell HMRC why you think they did not meet their responsibilities.

I think that HMRC have not met their responsibilities. When I phoned you and told you my son had left home, the lady did not make the change on my award even though I phoned you straight away.

When I told you about the change in my husband’s income, you made a mistake and put the wrong income on the form.

6. Tell HMRC of any evidence you think they should look at. This is very important if you think there might be a phone call where you gave them information or asked them a question.

If you can, tell them when you think the calls were made, but don’t worry if you cannot remember. If you wrote a letter with information, tell them when you think you sent it.

Remember to send copies of any evidence that you have like letters you sent, letters you received, or notes of any phone calls.

I would like you to listen to the phone calls that I made telling you that my son had left home and that my husband had received a pay rise.

I think that the first phone call was made around October 2007 and the second in January 2008.

7. Tell HMRC about any evidence you are sending.

I have sent a copy of the award notice that showed my husband’s income incorrectly.

If you don't know what caused your overpayment

If you do not know the reason for your overpayment, you will find it hard to write a detailed letter. Don’t worry, follow steps 1, 2, 3 and 8 and send your dispute anyway. Normally, the decision you get back will give you some reasons for your overpayment. You can then send another dispute by following the steps for Second disputes.

I have sent a letter asking HMRC not to take the money back, but they say I still have to pay it back. What can I do?

It can be so frustrating and upsetting to be told you still have to pay the money back, especially if you have waited a long time for a reply. But try not to worry, all is not lost yet.

The first thing to do is read the letter you’ve had from HMRC. The letter should contain some important information:

  • A phone number for the person who made the decision
  • The name of the person who made the decision
  • A reason why HMRC think you should still pay the money back.

Sometimes, letters are missing some of this information. If yours is, you can complain (see How to complain - tax credits) and follow the steps below.

The reasons that HMRC give are often confusing and hard to understand. Sometimes they even turn out to be wrong. Once you have read the reason, these are your options:

  1. If you agree with the reason they give, and think that the decision is correct, HMRC will want the money to be paid back. If you are still getting tax credits on the same claim, they will automatically reduce your payments. If HMRC have asked you for the money directly in the past, you should contact HMRC to arrange how to repay the money (see Repaying the overpayment). You should not ignore the overpayment as it could end up going to court.
  2. If you do not agree with the reason they give, then have a look at the section on Second disputes . This is very important if you did not know the reason for your overpayment when you sent your first dispute. You can now write a longer second dispute and explain why you think their decision is wrong. They will continue to ask you for the money or take it from your current tax credits claim while you do this.
  3. If you are unhappy with how HMRC have responded to you, then you can make a complaint (see How to complain - tax credits ). You can send a complaint as well as a second dispute if you want to.
Second disputes

HMRC say that they will only look at another dispute if there is new evidence.

The reason for sending another dispute is to tell HMRC why you do not agree with their reasons. For example, if HMRC write to you and say that you didn't tell them about a change in your circumstances, your second dispute should tell HMRC when you think you told them about the change and ask them to listen to the phone call/find a copy of the letter.

Follow the guidance in How to write a dispute letter showing you how to write a dispute letter. Between step 3 and 4 you should tell HMRC why you do not agree with their decision. If you have any new evidence, tell HMRC about it.

If you have no new evidence, but believe that HMRC have ignored evidence that you have already sent them, you should send a second dispute as well as a complaint. You should tell them what evidence they have ignored and why you think it is important. Explain that they should treat it as new evidence because it has not been looked at before.

There is no limit on the number of times you can send a dispute but HMRC will not stop asking for the money while they make their decision. However, normally HMRC will not change the decision unless you provide new evidence or you can show that they did not consider some evidence that they already had.

HMRC phoned me to talk about my dispute

Sometimes HMRC will ring you to talk about your dispute. They may tell you what caused the overpayment and why they think you have to pay the money back. They may do this instead of writing to you. If this happens, you should ask them to send you the decision in writing as well. This will make it easier if you want to make a complaint.

My dispute was turned down and I have no new evidence. What can I do now?

If you still do not think you should have to pay back the money, you can complain to HMRC. For information about how to do this see How to complain - tax credits.

You might also want to take your reply letter to an adviser to ask them to check that HMRC’s explanation is correct and that there are no mistakes. See How to find an adviser - tax credits.

After you have used the complaints system at HMRC, you can ask for your case to be looked at by the Adjudicator and later the Parliamentary Ombudsman. However, both of these independent people will only check if HMRC have carried out their responsibilities and not acted unreasonably. See Further help - tax credits for details about how to contact the Adjudicator and Parliamentary Ombudsman.

Repaying the overpayment

Do I have to pay the overpayment all at once?

No. The first letter that you receive might ask for all of the money back at once, but you do not have to pay it back at once. Have a look below to find out the different ways you can pay the money back.

Remember, if you have sent in an appeal they should not ask you for the money back until they have sent you a reply. From April 2013, if you are only disputing (and not appealing) the overpayment, they will keep asking you to repay the money.

If HMRC are asking you to pay it back straight away

The letter that told you about the overpayment normally asks for the money to be paid back in 30 days or over 12 months even though it is possible to repay it over a longer time. These letters are often difficult to understand at the best of times, let alone when you're worried and upset. It is important that you take some action when you receive this letter.

The options you have to repay are:

  • The full amount in 30 days – but most people can't afford this.
  • The full amount, spread out in monthly payments over 12 months. Depending on your situation, and the amount of the overpayment you might want to do this.
  • Over a longer period which you can afford.

If you want to pay over more than 12 months, you need to work out what you can afford each month and ask HMRC if they will accept it. Phone the number on your overpayment letter. If it will take you less than ten years to pay it back and the amount seems reasonable, they will usually just accept it without asking for full details about your income and outgoings.

If you want to make payments that will take longer than 10 years, HMRC will ask you for details of all the money you have coming in and what you need to spend it on. They will then work out how much they will accept.

If you are already paying back an overpayment from your tax credits, they should not write to you asking you to pay another overpayment back directly until you have finished paying back the first one.

Remember, you should not feel like you have to pay back more than you can afford. For more information see I can't afford it. You may be able to get help from an adviser - see How to find an adviser - tax credits. They could speak to HMRC for you and explain how much you can afford to repay each month.

HMRC are taking the money back from my tax credits: how much can they take?

If HMRC are taking money from your tax credits to pay back an overpayment, then the law says that they can only take certain amounts depending on your situation.

If you receive maximum tax credits (for example because you receive Income Support or Income Based Jobseeker’s Allowance) they can only reduce your payments by up to 10%.

If you receive less than the maximum tax credits, but more than the basic amount (which is £545) then the most they can reduce your payments by is 25%.

If you are receiving just the basic amount, they can stop your tax credits altogether until the overpayment is paid back.

If you also get housing benefit or council tax reduction you should tell your council that your income has gone down. You may be entitled to more help with your rent or council tax.

Other ways of collecting overpayments directly

Are you employed?

If you are employed, HMRC may take the overpayment back by adjusting your tax code so that you have more tax deducted from your wages. They can take back up to £3,000 a year by doing this. You can ask them not to do it if you can make them an offer to repay a reasonable monthly amount. If HMRC want to do this, they will send you a letter explaining this. You should ring the number on the letter if you do not want them to do this. But remember you will need to be ready to offer them a monthly payment directly (straight away) otherwise they will go ahead with adjusting your tax code.

Are you claiming Universal Credit?

Universal credit is a new benefit that is being introduced gradually from April 2013. Eventually, by 2017, it will replace tax credits. Small numbers of people will claim universal credit to start with. If you owe HMRC a tax credit debt and do not have a repayment arrangement set up, they will arrange for the overpayment to be repaid by reducing your universal credit.

If you do not set up a repayment arrangement

If you do not contact HMRC and offer to repay the overpayment each month, HMRC can take action to recover the money. Remember, they should only ask you to repay what is affordable based on your income and outgoings. If you cannot afford to make the payments they ask see I can't afford it.

If you ignore HMRC letters asking for the money to be paid back, they may send the debt to a debt collection agency. You will then be contacted by that agency. Even if that happens, you can still agree an arrangement to pay monthly with the debt collection agency.

If you continue to ignore HMRC letters, they may take more serious action such as taking you to court or coming to your home and taking your belongings. If you receive a letter that says HMRC are thinking about doing this, you should get advice as soon as possible. See How to find an adviser - tax credits. 

I can't afford it

If you have been asked to pay the money back straight away or have made a repayment plan that you can no longer afford, contact HMRC immediately if you cannot meet your essential living expenses like food, gas, electricity, water, and rent. You should also contact HMRC if you are a pensioner, are claiming sickness benefits or are unemployed and unlikely to be able to increase your income in the future.

You can ask HMRC to:

  • Stop taking the money from you for the moment (if they do this they will reconsider this every few months). They are more likely to do this if they think your circumstances may improve.
  • Accept smaller payments over a longer period of time. HMRC may ask you some details about your income and expenditure. If you think they are asking you to pay too much, get help from an adviser (see How to find an adviser - tax credits).They may be able to speak to HMRC for you.
  • Write off the overpayment. This means that HMRC will decide that you never have to pay the money back. They will only do this if they don’t think things will improve in the future. This does not happen in many cases. You may want to get help from an adviser (see How to find an adviser - tax credits).

If you share responsibility for an overpayment with an ex-partner

When you claim tax credits with a partner (called a joint claim), you agree that you will both be responsible for any overpayment. This means that if there is an overpayment from a joint claim, HMRC can ask either one of you or both of you to pay it back.

If you have separated from a partner, it is worrying to receive a letter asking for all of the overpayment and you might feel it is unfair that HMRC are asking you for the full amount.

You can still dispute or appeal the overpayment.

If you agree to pay the money back, you should contact HMRC to talk about how much you will pay. They should only ask you for 50% of the overpayment and should ask your ex-partner for the other 50%.

If you and your ex have agreed to pay a different amount each, you should tell HMRC.

Even though the law still allows HMRC to take back the whole overpayment from just one of you, they say that as long as you pay your share of the overpayment (normally 50%), they won't ask you for any more even if your ex partner can’t be found or is unable to pay.

How to complain - tax credits

Sometimes things go wrong with your tax credits or how they are dealing with your overpayment and you will need to make a complaint. You may want to complain if:

  • HMRC have not dealt with your tax credits properly.
  • You have not received good treatment from HMRC staff.
  • You have been given wrong advice by HMRC.
  • You are not happy with a dispute decision, but have no new evidence.
  • You have sent a dispute or appeal but have not received a reply for over 3 months.
  • HMRC haven’t explained the reasons for your overpayment properly

HMRC can accept complaints over the telephone if you ring the tax credit helpline. This might be useful if your complaint is about the helpline. Normally it is best to write a letter. You should set out your reasons for complaining and what it is you would like HMRC to do.

See Further help - tax credits for where to send your complaint letter.

I have received a response to my complaint letter but I am still not happy

You can take your complaint to a higher level. This is called a ‘Tier 2 Complaint’. To do this you should write a new complaint letter telling HMRC why you are not happy with their first response. Send this second complaint letter to the same address.

If you are unhappy with the response you receive to your second complaint letter then you can ask the Adjudicator to look at your case. See Further help - tax credits for information about how to contact the Adjudicator.

If you are not happy with the Adjudicator’s response, you will need to ask your MP to ask the Parliamentary and Health Service Ombudsman to look at your complaint.

It is important to remember that if your complaint is about an overpayment, HMRC will still keep asking you to repay the money while you are going through the complaints process. You should make sure you speak to the Debt Management part of HMRC to agree some payment of the debt otherwise they will pass the debt to a debt collection agency, take court action or use distraint. If you cannot afford to pay anything, you should still speak to Debt Management and explain your situation. For more information see Repaying the overpayment.

How to find an adviser - tax credits

You may be able to get help from a local independent advice centre or CAB that helps with benefits problems. Look in your Yellow Pages or search for your local CAB here: Citizens Advice

Turn2us offers a Find an adviser search.

StepChange offers free debt advice including advice on tax credit overpayments on 0800 138 1111. This is a freephone service including for all mobiles.

The Money Advice Service runs a Money Advice Line on 0300 500 5000 (English) or 0300 500 5555 (Welsh).

Your local council may be able to tell you about local advice services, and some local authorities run their own welfare rights service that may be able to advise you. Local council offices, community centres, or libraries should also be able to help you to find out about advice services in your area.

Sometimes there are services that you can access through your GP, social worker, hospital, or community centre. There's no harm in asking - so call your health centre, and your social worker, hospital, or community centre if you have one, and ask if there is a service for you.

Working families run a helpline for parents who work: 0300 012 0312. You can also e-mail for advice: advice@workingfamilies.org.uk

Gingerbread has a helpline for single parents: 0808 802 0925. It is open on Mondays: 10am to 6pm, Tuesdays/Thursdays/Fridays: 10am to 4pm, Wednesdays: 10am-1pm and 5pm to 7pm.

Jargon buster
The jargonWhat it means

Adviser

This is a benefit or tax expert who can give you help and advice about your overpayment.

Appeal

This is when you ask HMRC to look at the decision about the amount of your tax credits again. If they don't change the decision, a tribunal can change the decision if they agree it is wrong.

Award notices

These notices are sent to you after you first claim tax credits, and again every time you report a change to HMRC. They are normally 4-8 pages long and on the front have your name, address and the amount of your tax credits.

Complaint

This is when you complain to HMRC if you are not happy with any part of their service. For example, if they have not replied to a letter you have sent.

COP 26

This is a leaflet from HMRC that tells you about overpayments. See Further help .

Debt Management and Banking

This is a part of HMRC. Their job is to collect money that is owed to HMRC.

Direct Recovery

This is when HMRC ask you to pay back an overpayment straight away.

Dispute

This is when you agree that you were paid more tax credits than you were entitled to, but don’t agree that you should have to pay it back (perhaps because the overpayment was HMRC's fault). If your first dispute is unsuccessful, you can dispute your overpayment again: see 'Second dispute'. There is no limit to the number of times you can send a dispute, but normally HMRC will not change their decision or stop asking you for money unless there is new evidence or you can show that they have ignored evidence you sent before.

Dispute decision

This is the letter that HMRC send you if you have asked them not to take back an overpayment from you. It will tell you whether you have to pay back the money. If you do have to pay it back, it should tell you the reason why.

Hardship

This means that you cannot meet your basic living costs such as food, gas, electricity, water, council tax, and rent.

Ongoing Recovery

This is when HMRC make you pay back your overpayment by taking an amount off your current tax credits.

Overpayment

This means that you have received more money from tax credits than you should have.

Recovery

This is when HMRC take money from you because they say they paid you too much. Sometimes they write to you and ask for the money back, sometimes they take money from your tax credits.

Responsibilities

Each time you get an award notice from HMRC you should also get a list of things you should do. HMRC call this list your ‘responsibilities’. HMRC also have a list of things that they should do for you.

Second dispute

If HMRC have replied to your dispute and you still don’t agree that you should have to pay the money back, you can write again explaining why you think you should not pay back the money. This is a ‘second dispute’.

Tax Credit Helpline

The helpline is part of HMRC. You ring them to report changes in your circumstances. You can also ask them questions about your tax credits and get forms from them. The number is 0845 300 3900.

Tax Credit Office

They are the part of HMRC that decide if you will get any tax credits. They also pay your tax credits. If you have any problems, the Tax Credit Office will be the people who you speak to. They will also be the first people to answer your letters.

Tax Year

A tax year runs from 6th April to 5th April of the next year.

TC846

This is the form you use to send a dispute to HMRC.

Tribunal

If you have appealed and are not happy with the response you got from HMRC, you can ask a tribunal to look at your claim. This is a panel of experts who don't work for HMRC. They can change HMRC's decision if they think it is wrong.

December 2010

Further help - tax credits

General information and forms

You can find general information about tax credits and the appeal and dispute forms on the HMRC website.

You can also get the forms by phoning the Tax Credit Helpline and asking for a copy.

Contacting HMRC about your tax credits

Phone the Tax Credit Helpline on 0345 300 3900. The helpline is open every day (except Christmas Day, Boxing Day and New Years Day) from 8am to 8pm.

If you are deaf or have a hearing or speech impairment, the textphone number is 0345 300 3909.

If English is not your first language, ask for a translator straight away when you ring them.

Writing to HMRC about your tax credits

For explanations
Explanations Team
Tax Credit Office
Preston
PR1 4AT

For disputes
Dispute Team
Tax Credit Office
Preston
PR1 4AT

For appeals
Appeals Team
Tax Credit Office
Preston
PR1 4AT

For complaints
Complaints Team
Tax Credit Office
Preston
PR1 4AT

For further information about your appeal

HM Courts and Tribunal Service (HMCTS) is the government agency responsible for the administration of appeals. You can find useful information about the appeal process here: Social security and child support tribunal - appeals

For Complaints

The Adjudicator’s Office
PO Box 10280
Nottingham
NG2 9PF

Tel: 0300 057 1111
E-mail: adjudicators@gtnet.gov.uk

The Parliamentary and Health Service Ombudsman
Millbank Tower
Millbank
London
SW1P 4QP

Tel: 0345 015 4033
E-Mail: phso.enquiries@ombudsman.org.uk

Contact your MP
Find details of your MP and write to them here:  Contact your MP 

Top tips - tax credits

Top tips!

  • It’s a really good idea to keep all your tax credit stuff in a file.
  • Keep copies of your award notices and any other letters you receive about your tax credits.
  • Keep copies of any letters and forms you send to HMRC.
  • Keep a record of any phone calls you make to HMRC. Include the date, time and the name of the person you spoke to.
  • If you are sending important letters to HMRC, use registered post so that someone signs for it. Keep the proof of delivery in your file.

Share this content Email, print or share via social media