I have client who a few years ago (they were dealing with their own tax credits then!) did not submit the annual renewal for tax credits by the 31st July deadline. As a result their claim was suspended and no further information considered. Tax credits are now threatening legal action to recover the overpaid tax credits, however based on actual income the client was actually underpaid.
Is there any point in pursuing this through the legal system, or does the client have to repay? According to the legislation they do have to repay, however logically they should not have to repay these tax credits as they were actually entitled to have received a higher level of tax credits if the deadline had not been missed.
Would be interested to find out if there are any similar cases and if it is worth defending the legal action.