You have received a bill from HMRC for the overpayment

If you have received a bill for a tax credit overpayment then you may be concerned about how to pay it back. You may also be worried about possible debt recovery action by HMRC.

The demand you receive may seem frightening, but you are entitled to repay the debt over 12 months. Where this would cause you financial hardship you can negotiate a much longer repayment period. This may be as long as up to ten years in exceptional cases.

In some cases, HMRC will consider writing off the tax credit overpayment. This is likely to happen if your are living on benefits or low income and you would be unable to repay the full amount even if you were given a very long time in which to repay it.  If your are out of work, HMRC may agree to suspend collection for 12 months and then review the position. You can find out more about this in the HMRC guidance for advisers at http://www.hmrc.gov.uk/leaflets/how-hmrc-handle-txcr-opay.pdf – particularly the information from page 6 onwards.

If HMRC is threatening court action you should contact them immediately with details of your financial circumstances and ask for more time to pay.

You should phone HMRC on the number given on the most recent demand for payment.

If you think that the overpayment is incorrect, or that HMRC has made a mistake you have some additional options (see section 4).