‘I’m a struggling single mum and HMRC is chasing me for £5k I don’t owe’

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Dear Katie, 

I’m a single mother of two daughters, aged six and eight. I work for a charity that supports carers, which meant I was classed as a key worker during the pandemic. Because of this both my girls continued to attend school, nursery and after-school clubs throughout the lockdowns. I earn £17,000 a year and get extra help without which I wouldn’t be able to afford childcare. I declared all this information to HMRC last year.

Soon afterwards I received a letter inviting me to a mandatory phone interview to discuss my childcare costs. It took place in July 2021. During the interview I was asked to confirm that the childcare costs I had declared were correct and that my children had attended school and childcare throughout the pandemic. I did so and the call ended.

In September I was shocked when I received my final tax credits decision for the year 2020/21 stating that I had no childcare costs. HMRC said it had overpaid me by £4,764 and said I needed to pay this back via reduced payments. I am left in an utter state of panic. My gas and electricity bills have just risen massively and any reduction to my income will leave me struggling to make ends meet.

The letter said I should contact HMRC as soon as possible if any of the details were wrong, so I called the helpline. I was told that the details of my childcare for 2020/21 were in fact correct. The case was closed on the system, I was told. I asked to speak to someone higher up and was told to raise a dispute through the website. I did this more than three months ago but have heard nothing.

– CW, via email

Dear Reader,

I’m amazed that you managed to keep your cool with HMRC as well as you did. Its “computer says no” attitude was completely unacceptable and might have sent others in your shoes over the edge. However, you have become an extremely tough cookie, I came to realise, since you kicked out your abusive, manipulative partner when your younger daughter was just seven months old. From that moment you became a solo parent to two girls under three. What an incredibly brave thing to do. The fact you coped while holding down a demanding job will leave many reading this feeling quite in awe of you. I know I do.

You’ve been able to keep working only thanks to government support. You paid for childcare out of your own pocket on the understanding that the cost was being reimbursed via tax credits. But HMRC seemed to be denying that your children were ever in childcare during the period in question, which is bonkers. You have receipts which prove otherwise.

I got straight on to HMRC and asked it to escalate your complaint. Following a proper investigation I’m pleased to say the tax office was swiftly forced to eat its words. It confirmed it had incorrectly removed the childcare costs from your 2020-21 tax year. This happened when it amended your childcare costs for the 2021-22 tax year in September, not as a result of the compliance inquiry in July 2021, it said.

This came as a massive relief, but there was more. Despite HMRC’s false claim that you owed £4,764, I have established that in fact it was the one that owed you money. Its investigation found that, as a result of an earlier error, you had been underpaid by £1,300 in a previous year. You have now received this amount, along with £200 as an apology.

I really hope HMRC will take a long, hard look in the mirror over all this. The way it pulled the shutters down when it was the one in the wrong is simply appalling. A major review of its customer service is now needed, especially in light of the cost of living crisis. Errors such as this may seem like peanuts to tax officers, but for some families they are the difference between heating their homes and freezing.

Happily for you, this refund means you can still afford your bills. In fact, you say you no longer have an excuse for your elder daughter not to learn the trumpet. This is wonderful to hear.

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