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currall203
Starting Member
1 Posts |
 Posted - 13 May 2009 : 14:14:06
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URGENT
What happens to overpayment of tax credits when a person is declared bankrupt. The recovery of the overpayment is being sort prior to a bankruptcy having been made.
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John
New Member
United Kingdom
73 Posts |
Posted - 13 May 2009 : 14:40:36
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Hi
hope this helps:-
Final award notice (of repayment) issued before the date of the bankruptcy order.
If the recovery is made, or would have been made, by direct collection (in cases where there is no ongoing award of tax credits), HMRC will submit a proof of debt in the bankruptcy, considering the debt to be a provable one.
If the recovery is made, or would propose to have been made, by deductions from ongoing awards of tax credits, HMRC will not submit a proof of debt in the bankruptcy but will continue to make the collections from the ongoing award of tax credits until the bankrupt’s discharge from bankruptcy. Thereafter the balance of the debt will be written off. This action, of continuing to recover the debt post bankruptcy, follows the decision in the case of R v Secretary of State for Social Security, Ex Parte Taylor and Chapman [note 1] which provided that where a bankrupt was indebted to the Secretary of State for Social Security in respect of debts arising from earlier receipts of social security benefits, he/she was entitled to deduct sums from future benefits to be received thereafter in reduction of that indebtedness. Should any bankrupt object to the taking of the ongoing recovery action by HMRC in this way, they should be referred to that Department without further comment by the official receiver.
In all cases where a final award notice (of repayment) has been issued by HMRC before the date of the bankruptcy order, the debt should be added to the list of creditors and HMRC treated by the official receiver as a creditor in the usual way.
Final award notice (of repayment) issued after the date of the bankruptcy order.
Where a final award notice (of repayment) is issued by HMRC after the date of a bankruptcy order, whether the recovery action be considered by direct collection or from the ongoing award of tax credits, the bankrupt will be pursued by HMRC in the usual way even though the over-paid tax credits arose before the date of the bankruptcy order. This follows the decision in R (on the application of David William Steele) v Secretary of State for Work and Pensions [note 2]. In these circumstances the debt will not be included in the list of creditors. See also Chapter 40 Part 6 - Creditors and liabilities.
Should the official receiver require information on how HMRC intends to treat tax credit overpayments in individual voluntary arrangements, the official receiver should contact Technical Section directly for this information.
John White
England Jackman & Spacey |
Edited by - John on 13 May 2009 14:41:27 |
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shazzles
New Member
79 Posts |
Posted - 13 May 2009 : 18:17:25
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Hmmm i am in similar position, and i have to admit i didnt put this as a creditor on my SOA, even though they say i owe them £500 odd. John maybe you could shed some light on this, could I tell OR in my interview tommorrow about this additional creditor???quote:
Originally posted by currall203
URGENT
What happens to overpayment of tax credits when a person is declared bankrupt. The recovery of the overpayment is being sort prior to a bankruptcy having been made.
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Sparkle83
Junior Member
258 Posts |
Posted - 13 May 2009 : 21:03:27
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| hiya. we have a total of 6k owed to HMRC, all of our final demands for each period were before outr BR date, and we have no ongoing tax credits to be deducted from. All of this went on SOA and is cleared by the BR. hope this helps |
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URGENTWhat happens to overpayment of tax credits
