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]