Overpaid Tax Credits
Overpaid Tax Credits
This webpage tells you what to do if you agree that you have been overpaid but do not think that you should have to pay it back. This is called the 'dispute' process.
If you think HM Revenues and Customs (HMRC) have calculated your tax credits incorrectly and that you have not been overpaid, then you may be able to Appeal. There are strict time limits for this and you should seek advice immediately.
Do you have to Repay?
If HMRC tells you that you have been paid too much tax credit in the previous year, or that you are being paid too much during the current year, they will usually ask you to pay this back.
But you may not have to pay it back if:
- you met all of your responsibilities, but HMRC did not meet their responsibilities
- paying back the money would cause you hardship.
What should you do?
Stage 1
If you think that HMRC have not met their responsibilities use the Tax Credits Overpayment Form - TC846 
, and write to them and explain:
- why you think you met your responsibilities
- why you think that HMRC failed to meet their responsibilities.
The list of responsibilities that claimants and HMRC have to meet are listed on the checklist that is sent with award notices, on the TC846 dispute form and in Code of Practice 26
It is helpful if you can give as much information as possible, for example dates of when you contacted HMRC.
If you also failed to meet your responsibilities, you should still fill in the form if HMRC also failed to meet some of their responsibilities. In this situation they will sometimes say you only have to pay back part of the overpayment.
HMRC should stop asking for the money back, or stop taking it from your tax credit award whilst they consider your dispute.
Stage 2
If you are not happy with the reply from Stage 1 then send in a complaint to the Complaints Manager at the Tax Credits office using the Complaints Form (COM1) 286.73 KB 
HMRC will not stop asking you for the money during the complaints process. You can only have the collection stopped if you submit another TC846 or dispute letter, which you can do if you have new evidence or if HMRC have failed to consider evidence you have previously given them.
Stage 3
If you are not happy with the reply from Stage 2 then send in a request to review your complaint to the Director of Tax Credits using the Review Form (DIRECTOR1) 286.88 KB
Stage 4
If you are not happy with the reply from Stage 3 then make a further complaint to the Adjudicator’s Office using the Adjudicator Complaint Form (ADJ1) 286.8 KB
Stage 5
If you are not happy with the reply from Stage 4 then consider making a further complaint, via an MP, to the Parliamentary Ombudsman.
Hardship
If you agree that you have been overpaid and paying the money back would cause you hardship, write to the Tax Credits office. Give them details of your current outgoings especially any debts you have, for example, mortgage repayments or rent, and ask them not to recover all or part of the overpayment. Send them a copy of this list to show all your outgoings.
Paying Back an Overpayment
If you agree to repay an overpayment and HMRC are asking for the money directly from you, you can choose to pay straight away, over 12 months or over a long time if necessary because of your circumstances. If you are asking to repay over a period longer than three years, HMRC will ask to see details of your income and outgoings.
If HMRC are taking the overpayment from your current tax credit award, they should only be taking:
10% if you are receiving the maximum amount of tax credits
25% if you are receiving less than the maximum amount but more than the basic family element
100% if you are receiving the family element only.
If these amounts are causing you difficulty, you can write to the Tax Credit Office ask them to take less money.
The rules about tax credits are very complicated and HMRC often make mistakes. If you get a letter telling you that you have been overpaid and you are not happy with this then get advice.
Help and Advice
Useful phone numbers:
Tax Credit Helpline: 0845 300 3900
Tax Enquiry Line: 0845 302 1478
Useful websites:
HMRC
Low Incomes Tax Reform Group
If you live in Tameside contact the Welfare Rights Service:
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 Send us a Message |
 Welfare Rights Tameside MBC Council Offices Wellington Road Ashton under Lyne OL6 6DL |
 0800 074 9985 (Monday, Wednesday, Thursday - 9.30am-12.30pm)
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