HM Revenue and Customs (HMRC) rarely agree to write off a tax credit overpayment debt. However, in particular circumstances they may agree to release the person from their liability to pay the debt.
HM Revenue and Customs (HMRC) rarely agree to write off a tax credit overpayment debt. However, in particular circumstances they may agree to release the person from their liability to pay the debt. This is called remission.
How do I write off a tax credit overpayment?
If you no longer receive tax credits, HMRC may:
- Ask you to pay the overpayment back directly to them – they will usually write to you.
- Alter your tax code to recover the debt.
- Ask a debt recovery agency to contact you on HMRC’s behalf.
When do overpayments and underpayment in tax credits happen?
Overpayments and underpayments are a normal part of the tax credits system. This is because when a tax credits award is made it is not final until after the end of the tax year for which it has been given.
When is the final decision on tax credits made?
This is because when a tax credits award is made it is not final until a final entitlement decision is made which is usually after the end of the tax year for which it has been given or shortly after a claim is ended during a tax year (where a person claims Universal Credit in the same tax year).
Can a tax credit overpayment be recovered from Universal Credit?
Tax credit overpayments can also be recovered from payments of Universal Credit and DWP have a power more widely to recover tax credit debts by any of the methods it uses to collect its own debt. You can find out more about the move of tax credit debt to Universal Credit in our Universal Credit section.
Can a tax credit overpayment be without fault?
This adjustment process can, but does not always, throw up underpayments or overpayments. This annual design means that overpayments can, and do, occur without fault by HMRC or the claimant. Overpayments are by far the most controversial aspect of the tax credits system.
