Citizens Advice: Debt problem from overpaid tax credits

HM Revenue and Customs sign Image copyright Getty Images
Image caption HMRC said the amount of money paid out in overpayments had reduced

The number of people in Wales with debt problems relating to overpaid tax credits has risen sharply in three years, according to new figures.

The Citizens Advice charity said more than 1,300 people in Wales got in touch over the issue in 2013/14 but HM Revenue and Customs (HMRC) said overpayments had reduced since 2012.

Working tax credits are payments to top up earnings of lower paid workers.

People's income rising unexpectedly or an HMRC error leads to overpayments.

BBC Wales has spoken to a nurse in Pembrokeshire who was told that she owed £10,000 dating back to 2009.

Amanda Worth, from Llanfyrnach who lives with her husband and her 15-year-old son, said she had no idea that she was in debt with the Inland Revenue.

"We received 10 letters in one day which indicated we had an overpayment for each year dating back five years for amounts between £2,000, £3,000 and £400 - totalling £10,000," she said.

"They asked us to pay them back within a month. It was shocking, absolutely shocking. I didn't know what to do.

Image caption Amanda Worth said she received 10 letters in one day about the overpayment

"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."

Mrs Worth said that she felt sick about owing so much money.

Figures from Citizens Advice show there were 918 people who visited a bureau with an issue about debts relating to overpayment of tax credits in 2010/11.

That has increased by 45% to 1,329 in 2013/14.

'Very stressful'

In England, there has been a 52% increase from 12,024 in 2010/11 to 18,273 in 2013/14.

Sian Williams, project manager at Flintshire Citizens Advice Bureau, said that a number of people had visited the bureau with concerns.

"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," she said.

"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."

The HMRC said it could not comment on Mrs Worth's case but added: "As a result of policy changes which came into effect in April 2012, tax credits overpayments have reduced as a proportion of money paid out.

"Overpayments fell from £1.6bn (5.4%) in 2011/12 to £1.5bn (5%) in 2012/13, out of around £30bn a year paid to 4.5 million families.

"If an overpayment occurs as a result of HMRC's error, claimants do not need to repay the overpaid money. An overpayment only needs to be repaid if a claimant has failed to meet their responsibilities in telling HMRC of any changes of circumstance."

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