By Ian Pollock
BBC News personal finance reporter
You owe us £5,095, said Revenue
Hina Patel will not be applying for any more government money - even though she is sure she could legitimately claim several hundred pounds a year in child tax credit.
The reason? The last time she claimed, the Inland Revenue, recently renamed Revenue & Customs, overpaid her by more than £5,000 - and now she has had to borrow the money to pay it back.
Hina lives with her husband Hitesh Parmar in Stanmore in North London.
They are just one of the 1.8 million families that a committee of MPs
recently estimated had been overpaid when they claimed child and working tax credit in 2003.
Back then, she was training to be a dispensing optician and earned £11,000 a year.
Together with her husband's salary from his job as a community support officer, it meant they were well below the salary ceiling for claiming the recently revamped tax credits.
As Hina explains, the Inland Revenue encouraged her to apply: "They used to have vans outside shopping centres, I went inside and gave them my figures. They said yes, you should be getting some money."
"So I filled in my application pack, sent it off to them with all our salary details including three months' pay slips, they worked the figures out and I got an answer saying this is what you will qualify for."
The answer was that she was entitled to £300 a month for combined child and working tax credit. This was then paid through her payslip.
Hina wondered if this was a bit generous and twice during the 2003/04 tax year queried the amount.
Each time she was told to wait until April 2004 at the end of the financial year to see if the calculations were accurate. Then came the bombshell:
"This is what they wrote to me: you owe us working tax credit of £3,649, plus £1,446 of child tax credit making £5,095. When I asked them about this they just said, 'We overpaid you'."
Hina was shocked. As she says, £5,000 is a lot of money for a couple on average salaries to rustle up all of a sudden.
"We wrote to them, we phoned them, I said you overpaid me, I didn't ask for this amount."
Borrowing to repay
The family's pleading was to no avail. Hina and her husband had to borrow the money by extending their mortgage - so they have now incurred another debt that may take 25 years to pay off.
No more applications for tax credits
Hina is not amused and says the fault is entirely that of the Revenue: "People have to supply their P60 forms and give the right figures, so they can't lie."
Now that Hina has qualified as an optician, she and her husband are earning too much to get working tax credit, although she thinks she is still eligible for child tax credit. But she simply won't apply again:
"They will make a mistake and I will end up with a bill I don't have the money to pay for. Twice they have sent me forms asking me to renew my child tax credit application but I've binned them."
Hina knows two other people who were overpaid more than £5,000 and another who had to repay £3,000.
"It is a shocking thing. None of the three people I know are claiming any more. When you have to give it back, you think how am I going to do that?"
Hina says there has been no letter of apology from Revenue & Customs. And not even a written acknowledgement that she has finally paid off the £5,000 overpayment.
These days, the Revenue & Customs believes that its computer systems are working properly and most claimants are getting the right amounts.
But if bad experiences have put off some people from making legitimate claims, then confidence in the system of tax credits will continue to be low.
December 2004: the Revenue demanded its money back.
Tell us your experiences. Are you still being over- or underpaid, or is the tax credit system now paying you the right amount?
The following comments reflect the balance of views received:
My sister was "removed from the system" when she turned 16 and after contacted the them my mum was told that she would be backpaid what she was owed from when my sister turned 16 until they worked out how to put her back into the system again. After two years and hundreds of calls they back paid her, thankfully, but she was very disillusioned and felt like not bothering. To all those who don't want to claim, claim it now - it is your money.
Siobhan Devlin, Belfast, N Ireland
We were only eligible for a tiny amount in the first place. Once we applied we ended up getting two copies each of all correspondence each (ie four big thick envelopes each time), but confusingly with slightly different amounts shown. They then kept sending us requests for updates, which at first we ignored because the amount we got was so small it didn't seem worth it to reapply (it probably cost more in paper and admin than we got!). In the end we did send in our details only to receive a demand for £200 as a result. The obvious question is, why not just tax people less instead in the first place?
Adam Belding, Chelmsford
In a similar story to one of your correspondents, we receive four letters for every assessment of tax credits due. One for me, one for my wife and a duplicate set. We get four letters for the previous years figures, four to advise us of the next years and two more sets of four as reminders to complete the forms months before they are due.
Martin Lane, Sutton Coldfield
I have been told that I owe over £2,000 pounds and they have rejected my appeal stating that I gave them false details. This is despite repeatedly calling them to check that my figures were correct, and to inform them that one year's figures were very low and that my current salary was much higher. I was completely ignored and now having lost the appeal, been called a liar. All the calls I made to them have been mysteriously vanished off the system.
Richard Caines, London
I was awarded child tax credit in 2003 using my 2002/03 P60. I changed to a full time job late 2003 and early 2004 advised the Child Tax Credit by phone of my new salary increase, I think I am being overpaid. They said the figures will be adjusted soon. I have rung again this May and completed the review form with the latest salary figure. My payments are still on-going as it is a direct debit and I cannot stop it by myself. I also send a formal letter to their office but still no reply. I am worried that after a few years more they will come back to me and I have to pay a large amount of money.
Ellen, Reading, UK
I was overpaid working tax credits by £2,700 which was the tax credits office fault because I rang them twice to tell them that I had finished working yet they still continued to pay me. I appealed against this decision which took eight months and they finally admitted the mistake was down to them and I never had to pay the money back. Hina should do the same thing because the mistake was down to them.
Linda, Cwmbran south Wales
When my eldest son left full time education I asked for him to be removed from my claim. I then got a new award letter removing him for 2003/04 and 2004/05 leading to me owing nearly £5,000. The best bit was they then put him back on for 2005/06. I spoke to them and they said 'don't worry if you don't hear anything for a while, we will put it right.' After a few weeks of not hearing, I spoke to them again and they did not know anything about it. I am still waiting for it to be put right. I also phoned in July to report a change of income as my husband had a new job and was told it would make no difference to my award. Luckily I had the sense to know this was not right and I saved what I thought I had been overpaid.
Jacky Linsey, London
The government claimed to have overpaid my wife and I by £600 for 2003/4. We repaid this money and then they said they wanted £600 for 2002/3. I sent off my objection yesterday stating that as they were given accurate figures, its hardly our fault if they have overpaid us and that how on earth were we to know that the figures were incorrect - after all they are the government, you would think they can add up their own complicated equations wouldn't you?
Pete, Milton Keynes, England
After claiming tax credits last year after the birth of my son, we provided all the information they required and got the local tax office to check it. Since then we've had three or four re-assessments sent by the tax credits people, all changing how much we were to be paid, some sent days after the last one. They are now stopping paying tax credits because I cannot provide proof that I earned money in 2003, even though I have proof (checked by local tax office) I didn't earn anything at the time in question. They basically said that I should have told them the truth in the first place and that in light of further evidence they'll ask if the incorrect data they have about me can be removed, but this may not be possible, and they may cease payment. This was great news as I'd just lost my job and there are no benefits available to help towards paying for children these days, only a completely useless tax credits system.
Daniel, Aberystwyth, Wales
The system is ridiculous. They request details of your previous years earnings, have no link to the PAYE database - which would be a no brainer - and every communication we got from the came eight times. Four for me and four for my wife as each time we rang them to try and correct it they had just made a new duplicate entry in the database. This resulted in four contradictory demands for repayment. The system was so obviously broken we just banked the cash and repaid them what they asked for at the end of the year.
Stephen Morris, Stockholm, Sweden
My partner and I had a similar experience. My advice is - don't let the tax office get away with it! We made a complaint, went through the appeal process, tackled the matter through our MP and finally the Parliamentary Ombudsman. Eventually, the tax office cleared our overpayment and we started the new tax year with a clean slate. Please don't give up. This is not your fault and your family shouldn't have to suffer.
Eleanor Tait, Leicester, UK
I had a baby in March 2003 and was given the wrong form to complete. This mistake was not evident until October when I returned to work. There was no doubt that I was eligible for the period to October so I tried to claim a back payment. This took over a year to get, numerous calls and letters and eventually the intervention of my MP. I did get £40 compensation though (I spent that on calls alone). At various points they also sent me letters telling me they owed me £4,000 and that a cheque would be forwarded. Then they overpaid me by £900. Like the lady featured, I think my entitlement may have increased (my childcare fees have increased a lot) but I just can't face the hassle.
Lucy, Warwick, UK
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