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Tax credits stopped and asked to pay back for 2 years

(167 Posts)
Hopingtobehappy Tue 26-Mar-13 13:25:25

I dont know whether this is in the right place.

I am separated from H and have been for 18 months.

We run a business together still, address for the business is where I live.

Tax credits 'investigated' my single claim and they have written to us now sayingthat they have closed the claim and that I have to pay back £10K

I have not been given any chance to prove that H does not live here, they say that they have checked and that there are numerous 'association' with my address and that is sufficient doubt over my single claim.

Of course there are numerous associations! we run a business together! we have 2 joint mortgages and we have 2 children! what do they expect?

I am in a bit of a mess as payments have stopped altogether. Even when we were a couple we still had a claim jointly and even that minimum amount would have helped.

Hopingtobehappy Thu 28-Mar-13 12:00:32

Are we talking about mortgages here or are we talking about tax credits?

We mortgaged ourselves up to the eyeballs over the longest period possible, the two mortgages are in the region of £285K (give or take depending on the overdraft mortgage) between them, we are paying them over 35 years and we used the business for the repayment at the end of term. Our financial advisor helped us.

It would have been tougher to pay a rent of £700 as opposed to approx £400!

I move money around using the overdraft mortgage, not that that has ANYTHING to do with anything !

If we were entitled to TC as a couple, how come I suddenly arent as a single? is there anyone who can help with what I can do next, rather than discuss my mortgage?

allnewtaketwo Thu 28-Mar-13 12:13:30

"Are we talking about mortgages here or are we talking about tax credits?"

I think the reason why I and other posters are talking about the mortgages is because it's clear the 2 of you are very much financially linked, hence probably very relevant to how the tax credits people see it too. Yes you have a joint business but that has nothing whatsoever to do with needing to take out a joint mortgage on a house after separating.

You're not "financially" single, which is probably how the tax credits people see it

Hopingtobehappy Thu 28-Mar-13 12:23:49

OK thanks, right, so is that how it works?

Its a case of making sure that you do things a certain way? (which dosnt seem very clear)

Bacause a friend of mine gets full WTC and CTC and her ex pays her £2K a month in maintenance payments, which pays her mortgage (still in his name as well) and leaves her plenty over.

And the fact that I told then we still lived together and they changed my claim to a single one?

And as we were entitled to tax credits as a couple, if they are saying that we are still a 'couple' (whether financially or in a relationship) why havent they just put the claim back to us being a couple, rather than stopping it?

It seems a little made up to me! do they actually have any rules in place or is it just a case of whatever the 'tax credits people' decide?

Also, what if I wanted to take out a mortgage with a friend? would I not be allowed to do that whilst claiming tax credits? because another friend did just that, as a business venture.

allnewtaketwo Thu 28-Mar-13 12:27:17

I've got no idea if that how it works as I don't know anything about tax credits. But a hunch tells be that they're having trouble believing you're actually separated

PollyEthelEileen Thu 28-Mar-13 12:27:20

It looks to an outsider that you are very much a couple who want to use benefits to make capital investments.

If you had made a proper financial break from one another, would your tax credits have been stopped?

Hopingtobehappy Thu 28-Mar-13 12:39:34

If that is the reason that they have stopped the tax credits then great, they can pop round and see me in myhome where I live with the kids, or in his home where he lives with the klds when they stay there.

If only that were true and we were (clever? devious?) enough to have done something like that. Hardly worth the bother with the amount of stress that we have gone through trying to run a business together and keep everything ok for the kids (and us)

If I had moved out into rented I would have been entitled to HB as well as WTC and CTC, I would also have had the free school meals, Council tax benefit plus everything else you get, so yes, if we had been able to 'financially' separate properly I would have been entitled to a lot more than now!

Had we stayed together and bought another property, we could have rented it out so we would have been better off.

We each pay £1200 in council tax as well!

The route we have chosen was obviously the wrong one, despite trying to do the right thing for us all.

My main concern, as well as not even getting as much in CTC as we did as a couple, butthe fact they are asking me to pay back 'overpayments' when I have told them our circumstances throughout, they said I was entitled to the money I didnt ask for it.

MirandaWest Thu 28-Mar-13 12:52:54

If you were getting WTC you wouldn't get free school meals but I realise that's a small point.

Looking from the outside, you and your XH are financially very much linked with two houses in joint names. For CTC it doesn't matter whether you rent or own but surely you can see that having said you've separated from your husband and then buying a house with him looks like you could be just living separately but hoping to gain financially.

If you had gone into a rented house on your income you would have got some amount of HB, WTC dependent on no of hours worked and CTC. You might have got some council tax benefit. Whatever you should have single person discount on your council tax (even in the situation you are in now).

I understand about waiting until 2 years to divorce (that is what my XH and I are doing) but for everything else we are financially separated. Changing names on bills is very important. I did it as soon as he left. You are 18 months down the line.

Does he pay you maintenance? Mine is an informal agreement but I have detailed records of how it is calculated and when the DC have stayed with him.

You need to realise that it's not just the facts of what is happening but how it is perceived from the outside.

RedHelenB Thu 28-Mar-13 12:59:36

You wouldn't get housing benefit in all probability because you say you have investments joint with your husband & there is a savings link.

As to tax credits - it does also look as though you earn too much money to qualify if you have recently got a mortgage of £300,000.

Does your ex pay you a set amount of maintenance each month? If not, that is another flag that you are in fact still a couple to all intents & purposes.

As i said before I know it's not what you want to hear. But if the claim was in your name you need to be the one on the phone trying to sort it out not your accountant.

Hopingtobehappy Thu 28-Mar-13 13:04:44

Im not allowed to speak to them now, I instructed my Accountant to deal with it, so if I speak to them they wont deal with it any more, so I am in an even worse position.

I feel sick that they think we would have set this up to get tax credits, it has been extremely hard trying to carry on working and making sure the business doesnt fold in the midst of all this, the last thing on my mind was changing household bills!

Tax Credits know how much we earn, we are self employed they can see the amounts declared, and we had a tax investigation 2 years ago which came up with them owing us money, so they know that is correct.

RedHelenB Thu 28-Mar-13 13:09:20

So is your accountant disputing it then?

Hopingtobehappy Thu 28-Mar-13 13:11:58

They are doing it all in writing, they have written to them saying that tey dispute the claim being closed before I had a chance to do anything.

I just feel totally out of control and im worried sick about it all

PollyEthelEileen Thu 28-Mar-13 13:22:33

They won't get letters from claimants' accountants everyday wink

Hopingtobehappy Thu 28-Mar-13 13:23:11

How do you mean?

Hopingtobehappy Thu 28-Mar-13 13:31:16

SOrry just to also point out we dont have over the savings limit for anything, we have shares and bonds worth about £2K, neither of which are worth touching as we invested a lot more than they are worth now.

Just wanted you to know that as it feels as though people think I am sitting on some sort of goldmine!

RedHelenB Thu 28-Mar-13 14:38:03

Sorry, it's the way you posted about investments that made it sound as though you had a considerable amount!!!

Hopingtobehappy Thu 28-Mar-13 14:49:46

Not at all, I wish !

Its just things that are all joint, we have some bonds, some shares and life insurance, plus CI.

If we cancelled the life insurance what would happen to the house if one of us died, plus the business. the shares and bonds are not worth cashing and we cant start changing them into sole names as who would get them! they are for the childrens future anyway.

Even the houses, they are worth different amounts, so who would have which one!

We honestly thought that we were doing the sensible thing, as someone has pointed out, you can get TC if you are mortgaged or renting, I dont understand why this should make a difference.

I can sort of understand why some who have come on here may say we shouldnt be entitled because we both joint own 2 houses, but if we were able to buy (mortgage) one each, would people feel the same?

RedHelenB Thu 28-Mar-13 17:06:29

When you divorce you need to sort the finances out & separate your financial affairs asap. Does your ex pay you maintenance because if he hasn't then I really can;t see TC changing their monds on this one.

MirandaWest Thu 28-Mar-13 17:15:00

If you are separated you shouldn't have joint finances basically. Buying the other house on a joint mortgage and still holding joint investments is the problem. Not hiw much they are (afaik there is no savings limit with tax credits at the moment although this will change with universal credit).

IneedAsockamnesty Thu 28-Mar-13 22:38:35

www.hmrc.gov.uk/manuals/ccmmanual/

Op read that.

To be considered as a couple you have to be acting as a couple would its not just financial

I just can't understand how a not-couple with a combined income of £35k got even an interest-only mortgage for nearly £300,000.

Your finances seem very much combined, I wonder if the tax credit bods think you might be 'manipulating' the figures of who earns what from the business, in order to claim the maximum?

Ie saying you are separated and thus the only income they can take into account is your £10k which would give you I think about £9k tax credits for 2 children, per year.

I can sort of see why they have looked into your claim... as a single parent you would presumably get a lot more tax credts than when you claimed as a couple - but jointly owning property, (small) investments etc; to the authorities that might equal coupledom

wannaBe Fri 29-Mar-13 02:04:52

my xh pays me maintanence both for me and for our ds. The payments go into my bank account as such. The mortgage has his name on it because I wouldn't have been able to get a mortgage in my own right. When we were reading about divorce etc online the overwhelming opinion was that women almost never get back on the housing ladder after divorce because they simply cannot afford to as they are generally financially worse off. However the mortgage payments go out of my bank account and come out of the maintanence he pays me, so although we do have a joint mortgage on this house he's not paying that in addition to anything he's paying me iyswim.

He bought me out of the family home so he has one mortgage in his name and his name on my mortgage. We had a separation agreement to confirm that he bought me out of the house and that that money I have used as a deposit on this one.

So the only financial link we have is the mortgage. but now I'm guessing that even though we have that it's a financial link even though I have a copy of a separation agreement and divorce will come through shortly.

I might as well just withdraw my claim for tax credits now.

RedHelenB Fri 29-Mar-13 07:29:40

That's a different situation to OP's Wannabe. You aren't linked by tweo mortgages, investments, a business etc etc.

Hopingtobehappy Fri 29-Mar-13 10:17:02

We didnt get an interest only mortgage for £300K, if you read my posts we used one mortgage to fund another. ALl done through our accountnant, all perfectly legal , it took a long time to sort out, but we did it.

I dont believe that we are the only couple who have split whilst still having life insurance, bonds and credit card bills. You cant just get rid of these things!

I dont really understand the fascination with my mortgages, but hey ho!

I completely understand why they have looked into my claim as well, but I dont understand I now get nothing when we got money as a couple.

As the answers I have got on here are only 'opinions' it hasnt really helped! I wanted a legal point of view and a 'where to go now' stance. Not at all helpful telling me to put up and shut up.

Hopingtobehappy Fri 29-Mar-13 10:18:03

Wanabe's situation is actually very similar to mine, I dont see how that is different than mine it at all, apart from that they have a separation agreement, which I havent.

difficultpickle Fri 29-Mar-13 10:31:35

I had to pay back tax credits even though I am PAYE and they told me I was awarded the correct amount even though I queried it. They later said I had been overpaid. Unfortunately I only queried by phone so had no written proof and I couldn't check whether the amount was correct as they removed the calculation checker from their website. Really frustrating as it will take me years to pay back.

Still not sure how I was actually only entitled to very little as I had very little income for a year when I was on maternity leave (only 6 weeks at 90% followed by 4.5 months of £100 per week followed by 4 months of £0 doesn't add up to a lot). I tried to dispute it but found them next to impossible to deal with. What I found odd is they don't even send a yearly statement to show me what my outstanding balance is. I have to call periodically to check.

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