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Huge Child Benefit Overpayments. What to do?

There seems to be a glitch in their payment system

Didn't find your answer?

This is not a wind-up, I promise.

Client is separated from her husband and the husband had the three children. One of the children moved back with her so she put in an application for child benefit last month.

I must emphasise she applied for CB for only one child.

She got paid about £1000 on Monday this week.

She was a bit taken aback at the size of the payment but was pleasantly surprised and took most of the money out and spent it, stocked up on food and household essentials and bought some clothes for herself and her daughter.

The next day she got another sum of exactly the same amount. And the day after. Exactly the same amount. She called Child Benefits on Wednesday to tell them there's been some sort of mistake. The person she spoke with said that they couldn't figure out what was going on but they will look into it.

She got another payment yesterday, and one today.

She's now taken out £3,000 out and used it to pay off her credit card debt, like you do! I've advised to not withdraw any more of that money.

1. When HMRC eventually discover this error, if they discover it, how will they go about the recovery and would she get time to repay the £3,000?

2. Is there any way to get the payments to stop? Closing the bank account seems a bit drastic.

3. What else does she need to do at this point?

[Updated]

I think we're being a bit harsh. She's not financially astute and has had problems with debt in the past. The first withdrawal she made and spent was done in the genuine belief that HMRC had paid her in advance for the year. To her, that money was child benefit money so should be spent for the benefit of the child (though she did buy a top for herself that matched the top she bought for her daughter. Apparently, it was on the daughter's request)

The payment to the credit card was because she thought she was being wise with managing money. Her explanation was that as she is being charged interest in that credit card account and not getting any interest on her bank account it made sense to move the funds till HMRC tell her how much to pay back and how. Her intent is to repay any excess - she plans to draw cash from the available balance on the credit card to repay HMRC. She wasn't aware that CC companies charge for cash withdrawals.

My question about how to stop the payments is because she asked about it. She doesn't want to get any more of this money, that's why she called HMRC in the first place. She does have some appreciation that she's not great with handling money so wants the inflows to stop. Thanks for the suggestion on this, Cheshire. She'll call the bank on Tuesday and ask them to refuse any further credits from HMRC.

But I would still appreciate any comments on my original questions #1 and #3.

Replies (10)

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By Wanderer
22nd May 2020 23:38

Quote:
Huge Child Benefit Overpayments. What to do?
There seems to be a glitch in their payment system

This is not a wind-up, I promise.

Client is separated from her husband and the husband had the three children. One of the children moved back with her so she put in an application for child benefit last month.

I must emphasise she applied for CB for only one child.

She got paid about £1000 on Monday this week.

She was a bit taken aback at the size of the payment but was pleasantly surprised and took most of the money out and spent it, stocked up on food and household essentials and bought some clothes for herself and her daughter.

The next day she got another sum of exactly the same amount. And the day after. Exactly the same amount. She called Child Benefits on Wednesday to tell them there's been some sort of mistake. The person she spoke with said that they couldn't figure out what was going on but they will look into it.

She got another payment yesterday, and one today.

She's now taken out £3,000 out and used it to pay off her credit card debt, like you do! I've advised to not withdraw any more of that money.

1. When HMRC eventually discover this error, if they discover it, how will they go about the recovery and would she get time to repay the £3,000?

2. Is there any way to get the payments to stop? Closing the bank account seems a bit drastic.

3. What else does she need to do at this point?

It's what you do which is more important for you to consider at this stage.
No idea why you are considering 1. 2. & 3.
Resign and make a MLR. Your client is a thief.
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By SXGuy
23rd May 2020 07:35

When she rang to notify them of the mistake, why did she continue to spend the money she knew wasnt hers? Point 1.

Usually they adjust future payments to claw back any overpayments. But in this case I don't know since the amounts are large. Given she knew and told them it was wrong they may well expect her to have kept the money and be able to repay in one lump sum? She hasn't helped herself unfortunately.

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By Cheshire
23rd May 2020 08:29

'Like you do'

Really!!!

Her taking the whole of the first amount out and spending it on non essentials when she has credit card debt tells you what kind of person she is, never mind what she has since turned into, as Wanderer has said, is a thief.

She can tell her bank to reject the incoming bacs payments. But I've no doubt that she won't even if you advise her to do so.

Dump, report.

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By Matrix
23rd May 2020 08:35

I don’t really believe this. I don’t know where you could go and buy clothes for cash these days.

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Replying to Matrix:
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By Cheshire
23rd May 2020 09:00

Tesco. So I'm told.

I took the 'taken' out just meant swerved to another account in the mistaken belief then that the bank etc couldn't ask for it back.

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Replying to Matrix:
RLI
By lionofludesch
23rd May 2020 13:05

Quote:

I don’t really believe this. I don’t know where you could go and buy clothes for cash these days.

Folk might say card's preferred in these covid times but few shops will turn down a sale.

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By lesley.barnes
23rd May 2020 10:00

Its theft - you need to resign. Your client knew the money wasn't hers, from what you've said it sounds like she has no money and never likely to have any. She is playing the system and believes that as she has nothing now then the DWP won't be able to claim anything back. They could apply for an attachment of earnings if she is working. I've seen that on payrolls when people owe DWP money. I'm assuming that because she has an accountant then she has some income. She's hoping to get away with it, you will find that the remaining £2k in her account will also disappear along with any other payments that go in.

They usually ask for a lump sum back. My only experience of a Government Dept overpaying was personally when they overpaid my mums pension tax credits. I told them straight away but they still continued to overpay for months because someone at the DWP had "left her file open" on the computer system. It took a flurry of letters and telephone calls to stop it and accept that they had overpaid. It then took a further two years and a lot of chasing from me to get bank acct and reference numbers to repay it. When they finally sent details they wanted it all in one go which was just over £3.4k.

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RLI
By lionofludesch
23rd May 2020 13:07

I haven't much sympathy with HMRC here.

They've been told. £1000 a day leaking out of the system is clearly urgent. Payments will stop when they're ready to deal with it.

I'd transfer the money to a savings account and wait for them to take action.

Thanks (1)
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By Cheshire
24th May 2020 08:53

Quote:

[Updated]

I think we're being a bit harsh. She's not financially astute and has had problems with debt in the past. The first withdrawal she made and spent was done in the genuine belief that HMRC had paid her in advance for the year. To her, that money was child benefit money so should be spent for the benefit of the child (though she did buy a top for herself that matched the top she bought for her daughter. Apparently, it was on the daughter's request)

The payment to the credit card was because she thought she was being wise with managing money. Her explanation was that as she is being charged interest in that credit card account and not getting any interest on her bank account it made sense to move the funds till HMRC tell her how much to pay back and how. Her intent is to repay any excess - she plans to draw cash from the available balance on the credit card to repay HMRC. She wasn't aware that CC companies charge for cash withdrawals.

My question about how to stop the payments is because she asked about it. She doesn't want to get any more of this money, that's why she called HMRC in the first place. She does have some appreciation that she's not great with handling money so wants the inflows to stop. Thanks for the suggestion on this, Cheshire. She'll call the bank on Tuesday and ask them to refuse any further credits from HMRC.

But I would still appreciate any comments on my original questions #1 and #3.


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Of course this isn't a wind up.

You know a lot about this top that was bought.

Ring the bank on Tuesday. Remember they are only open 9.30 to 3.30 even for phone calls, as we are back in 1980.

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Replying to Cheshire:
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By Matrix
24th May 2020 09:05

But what about future benefits payments, why would you tell the bank not to accept them?

I don’t get involved in benefits. If the client has told me they have reported it to HMRC then I don’t see what I could do to help. Except I don’t believe this is child benefit. You can only go back 3 months so I don’t see how such a large payment would ever be made.

If their question is, could HMRC ask for all the money back at once, then of course I would say Absolutely.

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