Overpaid Tax Credits Cause Debt Problem

taxcreditsIn the last three years, the number of people in Wales who are having debt problems from overpaid tax credits has sharply risen. This is according to new figures gathered by Citizen’s Advice.

The charity said there are more than 1300 people living in Wales who got in touch with Citizen’s Advice about tax credits between 2013 and 2014. It was a result of errors at HM Revenue And Customers due to people’s incomes rising unexpectedly. However, the government department has stated that there has been a reduction in over payments since 2012.

The BBC spoke to a nurse from Pembrokeshire, Wales who was told by HM Revenue And Customers  that she owed £10,000 dating back to 2009. Amanda Worth, who lives with her husband and teenage son, said she had no idea she was in debt with Inland Revenue and suddenly started receiving enormous bills on a daily basis.

She said:

[quote]We received 10 letters in one day which indicated we had an over payment for each year dating back five years for amounts between £2,000, £3,000 and £400 – totaling £10,000. They asked us to pay them back within a month. It was shocking, absolutely shocking. I didn’t know what to do. All of a sudden you’re in debt. I tried to contact them but it was a bank holiday. When we tried to contact them on the Tuesday, it took over an hour and a half to get the right telephone number to actually speak to somebody instead of something automated telling you what you want.[/quote]

Citizen’s Advice figures suggest that there were just over 900 Welsh people who came to them with issues about similar debts related to tax credit over payment in 2010 and 2011. This has gone up by a staggering 45% over the last 12 months to 1329 people. In England, this is an even higher 52% from 12,000 to 18,300.

Sian Williams, who is the project manager at Flintshire Citizen’s Advice, said:

[quote]People find it very stressful. They can be quite anxious; we’ve had people in tears. It’s quite scary to receive a demand from HMRC. A lot of people may just believe that they have to pay it back and it must be their fault. But actually people should get advice and sometimes it could be challenged.[/quote]

HM Revenue And Customs offered some advice to those who may find themselves in this situation.

[quote]If an over payment occurs as a result of HMRC’s error, claimants do not need to repay the overpaid money. An over payment only needs to be repaid if a claimant has failed to meet their responsibilities in telling HMRC of any changes of circumstance.[/quote]

HMRC Warns Of Scam Emails Promising Tax Refunds

Her Majesty’s Revenue & Customs is wishing to warn tax payers ab0ut phishing emails which promise a tax refund. These emails are not originating from HMRC but rather fraudsters who are urging victims to reply before the 31st July 2014.

HMRC said that in May 2014 over 11,000 phishing emails were sent which is up 131% on the same time last year. During the tax renewal period in 2013, HMRC received reports of around 25,000 spam emails between April and July.

The tax authority closed down 1,740 illegal sites that mostly originating from the likes of Bulgaria, Turkey and Spain during 2013. However, emails themselves also came from the UK and USA. If the recipient clicks on a link within the email, they are taken to a fake HMRC website and asked to provide bank details alongside other information like passwords. Personal details can then be sold onto criminals who may commit identity theft as well as stealing money from bank accounts.

HMRC is asking those who receive this type of email not to click on any links or attachments and should forward them on to phishing@hmrc.gsi.gov.uk and then delete them.

One scam email was sent from ‘taxreturn@hmrc.gov.uk’ informing them of a tax refund report of 2013. The email appeared to be sent from Tax Office Preston and contained an attachment which was a virus.

For more information about security, visit the HMRC website or call the helpline number advertised on this site. HMRC

Labour Propose Corporation Tax Rise

The Labour Party will confirm next week that it will raise Corporation Tax if it is elected next year. The party is also considering a tax break in order to equalise the way that debt and equity finance for companies is treated.

Ed Balls, the Shadow Chancellor is allegedly going to say that he is examining the case for an ‘allowance of corporate equity’ as part of proposed reforms to encourage businesses to think more long-term. He will reiterate the party’s intention to reverse Government plans currently in place to cut Corporation Tax in April by 1% because it believes that cutting and then freezing business rates on premises is of a higher priority. This move means that Labour will be committed to maintaining the most competitive corporation tax rate in the G7. This stance could still give the party room to increase the tax if it wins the next General Election. Corporation Tax Helpline

Currently, the UK’s corporation tax rates are much lower than other G7 countries following a series of cuts by the Government in the last few years. Canada has the lowest rate at the moment of 26.3 per cent.

The Labour Party is also considering an allowance for Corporate Equity, an idea that has been floating around since the 1980s in order to address the way that Britain and its tax system favours debt finance over equity finance, as critics believe that this can lead to an over-reliance on debt.

Versions of this have been introduced in Italy and Belgium but the policy could prove to be very expensive. When asked about the idea, Mr.Balls said that he and his party were pursuing ‘big ideas’.

Separately, Labour leader Ed Miliband kicked off a week of economic announcements by saying that he would transfer £30 billion worth of funding from central Government to local Governments.