A taxing repayment

By THIS IS MONEY
Updated: 19:00 EST, 15 June 2004

IF the Inland Revenue admits liability for overpayment of Working Family Tax Credit, could compensation be claimed for hardship incurred by their reclaiming the money? JP. Llanelli.

This Is Money's Linda Whitney says: The Inland Revenue directing me to its Code of Practice for Dealing with Overpayment of Tax Credits (leaflet COP26) available on its website www.inlandrevenue.gov.uk.

The code says nothing about compensation for hardship caused by having to pay back overpaid tax credits, but it does say that where you have overpaid tax credits because of a mistake the revenue has made, it may decide you do not have to pay it back at all if it would cause you hardship and it was reasonable for you to think that the amount you were paid was correct.

It looks into the full circumstances before it makes a decision. If it decides you still have to pay the money back you can ask to pay it off over 12 months if it a lump-sum repayment would cause difficulties.

For more help with this, see the website, or call the tax credits helpline on 0845 300 3900 (0845 603 2000 in Northern Ireland).