Working tax credits - bankrupt person

[giggles321]

I claimed for working tax credits in 2004/05, received about �280, when I realised I should not of had it, I wrote to them explaining. At present I am bankrupct. Although they know about this, they are still demanding that I have to repay this amount, can they do this?

[PrinceRainie]

When did you go bankrupt?

Although I strongly suspect that the date of your bankruptcy will be irrelivant as owing money to the tax man I think is different to owing money to creditors etc as the tax man will always have his share prior to anyone else....therefore...you will very probably have to cough up..!

[themas]

No they cannot do this!.

The debt is included in the bankruptcy just like any others. It has to be dealt with in the same way - in other words you cannot/must not pay them yourself (the rules would be rather different if you were still getting tax credits).

There is detailed information in the Tax Credits Technical Manual about this, & the people you are dealing with should know about it. Do not pay them, & speak to your Official Receiver if you still have problems.

Once you are discharged from bankruptcy they have to write the debt off.

[themas]

PS - as bankruptcy is normally for a maximum of 12 months my above answer assumes you only went bankrupt recently. However, if for some reason you have been bankrupt a long time & the date you became bankrupt was before the Tax Credits people finally fixed the amount you owed & notified you of it (which should have been in the summer/autumn of 2005), then the situation is different because in that case the debt does not pre-date the bankruptcy so is not included in it.

[giggles321]

Firstly my O.R. said to send them a letter saying its part of my bankrupcy and if they hassle me I can go to the police. One week later the O.R. changed his mind and said even though they know about my circumstances they still have a right to demand all the money back from me as they will only get part of it back throu my bankrupcy and I will have to repay it. If my O.R. is telling me 2 different things who can I go to for the right information if my O.R. is telling me different things??

[giggles321]

PS I have just literally had a letter from the O.R. saying that I have been discharged.

[themas]

Go here:

http://www.hmrc.gov.uk/manuals/ntcmanual/payme nt_opayments/ntc0780052.htm

Read it, & also the next page (click for that at the bottom of first page). It makes it clear that they write off (remit in their terminology) any outstanding amount as at the date of discharge from bankruptcy. If you were still getting tax credits while bankrupt (I don't think - from your post - that you were) then they will have been collecting from the ongoing payments until discharge.

You may well be dealing with their Debt Management arm (? at Cumbernauld). It is possible that they are not aware of the procedure set out in the manual so write to them with details of it, & also a copy of your bankruptcy order and discharge certificate. Send by Recorded Delivery & keep a copy of the letter. If they refuse to write it off go through the HMRC complaints procedure (they have a booklet on that).

Incidentally, if the tax credit claim was a joint one with someone who is not bankrupt, then they can continue to collect from that person.

[giggles321]

Where did you find the bit:- "Once you are discharged from bankruptcy they have to write the debt off."
Thanks.

[themas]

This is bankruptcy law - all normal debts are written off on discharge (if they have not been paid out of the proceeds of the bankruptcy - which is very unusual).

The manual I referred you to makes it clear that this also applies to Tax Credits.

[giggles321]

Themas, many thanks for all of your help, it is very much appreciated. x