Debt collectors to reclaim overpaid tax credits
12 or more Debt Collection Agencies (DCA) have been briefed with the task of reclaiming over £1.6 billion in overpaid tax credits.
It is reported that over 4.5 million cases are currently open for chasing. The DCA’s are making initial contact with the taxpayer by telephone, but in almost 100 cases assets have already been seized.
Tax credits are based on an estimation of earnings in the year ahead so over-payments become due when a taxpayer earns more than they expect to. It is only at the end of the year that they may realise that more tax credits have been claimed than what was due.
Over and under payments have always occurred in the tax credit system due to the fact that credits are issued based on current information and future predictions and not historical facts.
However, HMRC detail that most errors occur when the taxpayer fails to inform HMRC of new circumstances at the earliest opportunity, resulting in miscalculations.
What do I need to do?
The only suggestion really is to keep HMRC informed at all times to avoid having to find money to pay back tax credits that have already been spent.