If your entire tax credit claim was wrongly stopped by the contractor Concentrix you'll receive a lump sum repayment, HM Revenue & Customs said today – but if only part of your claim was removed or reduced, you'll have to wait to get the money back in instalments.
MoneySavingExpert.com has been inundated with horror stories from people claiming their tax credits were incorrectly cancelled with Concentrix, with some claiming they've been struggling to feed their families as a result. Earlier this month HMRC announced it isn't extending Concentrix's contract beyond May 2017 and it's promised to prioritise helping those who've had tax credits incorrectly stopped.
But there's been widespread confusion over whether those who successfully appeal a Concentrix decision will get repayments as a lump sum or in instalments.
HMRC originally told us that if your tax credits were wrongly stopped you'll have them repaid in one go. However, after a number of people contacted MSE founder Martin Lewis to complain they're getting repayments of as little as £3/week on top of their reinstated tax credits, it's since clarified that while that's true if your credits were stopped, it's not the case if only part of your claim was removed.
Concentrix had been hired by HMRC to cut tax credit fraud. Tax credits are payouts made regularly by the state into bank accounts to support those with children or in work but with low income.
See our Tax Credits guide for more info, and Concentrix tax credits help for how to appeal.
I've successfully appealed – will I receive a lump sum?
HMRC's now clarified this all depends on whether your claim was terminated completely, or only an element of it (eg, the family element of child tax credit) was stopped or reduced.
If you've successfully appealed Concentrix's decision to remove or reduce your tax credits with a 'mandatory reconsideration', then:
- If your entire claim was wrongly terminated... You'll receive a lump sum amount for the period where payments were terminated. You'll then continue to receive your usual tax credit payments in future.
- If one or more elements of your claim were wrongly terminated... Your payments will be recalculated and increased to take account of the repayments you're owed – but the extra money you're due will be spread out over the period to 5 April 2017 and paid in instalments.
Since publishing this story some of you have been in contact to tell us that you're being repaid weekly rather than a lump sum despite having your entire tax credits claim stopped. We've asked HMRC to explain this and will update the story when we hear back.
'A farcical and arbitrary difference'
Martin Lewis, founder of MoneySavingExpert.com says: "This is a rather farcical and arbitrary difference. If people have been given the wrong amount of tax credits and have been planning on this money, HMRC surely should be trying to put them back into the position they ought to be in, as soon as possible.
"The obvious way to do this is to pay them a lump sum. It is very unfair the way HMRC is operating this."
'Very wrong and unfair'
We've been contacted by scores of people who say they've wrongly had tax credits stopped by Concentrix – and many of them are furious that when they've managed to appeal, repayments have been spread out.
Tania says: "Many people are getting as little as £3 per week on top of their weekly tax credits. Some have gone months without any money. They have had to borrow money to survive. So for HMRC to pay them back in weekly instalments is very wrong and unfair. These people have done nothing wrong but they are being punished for HMRC's and Concentrix's mess-up."
Samantha says her tax credits were stopped for three weeks, and she was left with a £360 shortfall.
"They've now been reinstated with an extra £6 per week," she says. "That doesn't pay off any of the debt I've incurred from their mistake. They lost my recorded delivery paperwork yet I was the one penalised. I feel for those that have waited even longer. I really struggled."
Karen says: "They don't pay you back what they owe you in a lump sum, it will be weekly, leaving people in dire straits. When you owe them they take it from your money straightaway, but when they owe you, getting it is much harder."
What does HMRC say?
A spokesperson for HMRC told us: "Payments that have been suspended will begin again as soon as possible – normally within four working days, if not sooner. Any money due to customers will also be paid back. Some will get payments as a lump sum. Others will receive additional payments over a period of time depending on individual circumstances.
"Any customers who are in hardship should contact the HMRC helpline [on 0345 300 3900] who can look at options for short-term payments to support customers with severe financial difficulties."