HM Revenue and Customs

4. Ms O complains HMRC says it overpaid her WTCs for the tax year 2020-21 and that she needs to repay £4,067.69.

5. Ms O says this has caused her considerable stress, anxiety and upset.

6. Ms O would like the debt to be removed as an outcome to her complaint.

7. HMRC calculated Ms O’s tax credits entitlement for the tax year 2020-21 to be £8,468, made up of £3,379 Child Tax Credits (CTC) and £5,088.10 WTCs.

8. CTC was a UK government financial support scheme for people responsible for children. It provided money to families on low incomes to help with the costs of raising a child, whether the adults were working or not.

9. WTC was a UK government benefit designed to top up the earnings of people who worked and had a low income.

10. In July 2021 HMRC wrote to Ms O to explain its records did not show she had any Pay As You Earn (PAYE) information for the tax year ending April 2021. It said it wanted to discuss information it had about her tax credits to ensure the payments being received were correct.

11. The letter requested Ms O attend a telephone interview at the end of July to discuss her circumstances further. It also explained what evidence it would need her to provide to help with her claim. The letter explained her tax credit payments may stop or go down if the interview did not take place.

12. PAYE is the HMRC system used in the UK to automatically deduct Income Tax and National Insurance from employees' wages or pensions before they receive their pay.

13. In mid-August 2021, as HMRC had not received a reply from Ms O, it changed its records to show her working hours as zero. This ended her WTCs from April 2020 and meant that any WTC payments made from this date became an overpayment. HMRC wrote to Ms O to explain that, as she had not replied to its letter or sent in the evidence requested, it had amended her award.

14. A few days later, HMRC sent a Final Award Notice. This showed it had removed the WTC element of her claim and explained the total tax credit entitlement for 2020-21 tax year had reduced to £3,393.84. This meant Ms O had been overpaid by £5,118.90. The letter explained she had 30 days to ask for a Mandatory Reconsideration (MR) or three months to dispute the decision to end her WTCs. A MR is a formal request to challenge an HMRC decision.

15. At that time, HMRC transferred the outstanding overpayment to the Department for Work and Pensions (DWP). DWP then recovered £1,051.21 from Ms O’s payments in tax years 2021-22 and 2022-23. This left a balance owing of £4,067.69.

16. In March 2024, the DWP sent a letter to Ms O about the outstanding amount. At the beginning of August, the DWP also wrote to Ms O to say it had been unsuccessful in contacting her employer regarding Direct Earnings Attachment (DEA) deductions. This is a process where the DWP or local authorities recover overpaid benefits or tax credits directly from an individual's wages. Ms O says this was the first time she became aware of the balance owing.

17. At the end of August, Ms O submitted a dispute form to HMRC to challenge the overpayment amount. HMRC replied to her in September to explain the overpayment had occurred as she had not replied to its letter of July 2021, and so it had ended her WTC award. It explained it would only consider her overpayment again should she have new information about her claim.

18. In October Ms O wrote to HMRC again to explain she still did not understand how the overpayment occurred. HMRC treated this as a complaint at tier one of its complaint processes. In November HMRC sent its reply to Ms O. This explained it had reviewed Ms O’s overpayment and reiterated how the overpayment had occurred. It also sent Ms O a copy of the letter sent in July 2021, as she had requested.

19. In December Ms O escalated her complaint to HMRC tier 2. HMRC sent its final response in February 2025 and concluded the overpayment to be correct, as it had reduced her working hours for the tax year 2020-21 to nil. It awarded a £50 redress payment to apologise for its delay in replying to the complaint.

20. The following week, Ms O escalated her complaint to the Adjudicator’s Office (AO) which sent an acknowledgement of her complaint. The AO responded in July. It explained she had an appealable route for HMRC’s calculation of her tax credits entitlement, and that HMRC had directed her to this route in its correspondence within the relevant timescales.

21. Ms O then escalated her complaint to her MP in August and then us.

24. Ms O complains HMRC says it overpaid her WTCs for the tax year 2020-21 and that she still owes £4,067.69.

25. Ms O says she was unaware of the overpayment as she had not received the letters HMRC says it sent in 2021, and so she would like the debt to be removed.

26. An overpayment happens if HMRC pays someone more than their tax credits award. The Tax Credits Act 2002 says that if someone disagrees with HMRC’s calculation of their award or entitlement, they can challenge this. To make a challenge, someone first needs to ask for a MR within 30 days of the date of the award notice.

27. If they then disagree with the result of the MR, they can bring an appeal to the Social Security and Child Support Tribunal. This appeal needs to be brough within 30 days of the result of the MR decision. HMRC is clear that if a claimant believes there are any errors on the award notice, they need to tell HMRC within 30 days. These provisions are explained in HMRC’s guidance ‘Tax Credits: appeals and complaints.’

28. The decision HMRC reached about Ms O’s WTCs had a route of appeal available to her, first through a MR, and then, if needed, an appeal to the Tribunal.

29. The Parliamentary Commissioner Act 1967 says we cannot consider any matters if someone has or had a legal or tribunal route available to them. We can only consider these matters if it is or was unreasonable for the person to pursue it via these routes.

30. Ms O had a statutory route of appeal to challenge the decision reached by HMRC. This would first be via a MR and then the courts. This is the only way Ms O could change the amount she owes HMRC. This means it would have been reasonable for her to follow that route.

31. We have explored with Ms O why she may not consider it reasonable to have followed the appeals route. She tells us she did not receive HMRC’s letters giving her the information about the overpayment or her rights to a MR, and so did not have the opportunity to pursue that route.

32. The evidence shows in 2021, there were three letters sent to Ms O. These letters asked Ms O to contact HMRC about her tax credit claim, explained that her WTCs had ended and the reasons why, and explained the overpayment that had occurred and of her rights to dispute this or ask for a MR.

33. While we recognise Ms O’s position that she did not receive these letters, HMRC’s records show the letters were issued and not returned. This means we cannot say the letters were not issued to Ms O. We also cannot investigate or resolve disputes about legal entitlement where a statutory appeals route existed, we must treat that route as having been reasonably available to her. As such, we cannot conclude that HMRC failed to provide Ms O with the statutory appeal rights she needed. Nor can we speculate as to why Ms O may not have received them.

34. Based on the above, in line with our Law, we will take no further action on this aspect of the complaint. This is because Ms O had an appeal route to challenge HMRC’s decision. We understand how worried and upset Ms O feels about her tax credits and hope we have explained how we have considered the evidence available to us to reach our decision in this case. We wish Ms O all the best for the future.

1. We have carefully considered Ms O’s complaint about HM Revenue & Customs (HMRC). We are sorry to hear of the difficulties she has experienced in relation to her Working Tax Credits (WTC) claim. We can see from the information she had shared that these matters have caused her upset and stress.

2. After carefully considering Ms O’s concerns, we can see that she had a legal process she could have used to challenge the HMRC decision she is complaining about and did not use it. This means we cannot consider her complaint further.

3. We will explain our decision in detail below. We hope this will help to understand our decision and give some reassurance about what happened.