I was notified by HMRC that my child benefit would need to reviewed as I was in a salary bracket that meant part of The benefit may be lost in the new regulations. The child benefit was classed as income within the iva.
The option was to stop the child benefit or complete a self assessment at the end of the year and pay back anything overpaid.
I contacted the IP who advised to carry on claiming child benefit and I would then need to pay back any amount owing and they would work out how this affected the iva. It was new and they where unsure how to deal with this. I have written evidence in a form of an email that says this
My iva finished in November but we still owe an amount of £800 which should be paid, however the self assessment now says I need to pay back £1200 to HMRC.
Am I within my rights to not pay the £800 and ask for my completion certificate? Should I also expect a refund of £400 from the iva firm to cover the full cost of the HMRC bill?
They are threatening breach of iva because of this £800, but I think if I paid it I would a real uphill task to get anything back from them.
In my opinion you should deal with your IVA and ensure this is cleared and then work with HMRC to resolve the child benefit matter.
In hindsight it probably woukd have been more advisable to have stopped the child benefit element to avoid this overpayment ... however you are where you are now so will need to resolve it in order for you to receive your closure certificate etc.
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There is a solution for everyone .... Just need to stay positive !
Once you reached the bracket whereby you lose child benefit it should have been ignored for income purposes. You should then have saved the child benefit to pay the tax bill when it arrived.
There are times when IP's or their staff really should not offer an opinion as they run the risk of reinterpreting legislation or systems that should be best left alone.
In this case pay the £800, HMRC are likely to be easier to deal with in terms of any arrears and if you have documented evidence that you were given poor advice then complain to the IVA firm that provided it.
IVA started March 2011, Completed March 2016 and certificate issued 11 days after final payment. It was not always easy but then some of the best decisions aren't.
This applied to us this year too, and was the first time we had to fill out a self assessment. We owed a similar amount, and I know this is not of much use to you now, but we completed the return before 31st dec, and hmrc are now claiming it back through PAYE equally over this year (for last years "overpayment") obviously no good to you now, and also if you don't use PAYE. However our iva company are reducing my husbands income, and therefore our iva payment so we can pay it back. Its still beneficial to us and our creditors to be able to claim a portion of our child benefit payment. Such a crazy system, but don't get me started on that one!
I can't really offer much advice, but thought my experience may help you or others in some way. Hope you get it sorted.
If you cancel the child benefit you stop receiving credits towards the state pension and many people are afraid to do this for that reason. The DWP is supposed to continue adding credits if they are advised even if you do cancel your child benefit entitlement but many people fear this will not happen.
It is a crazy system and very unfair and people are therefore claiming something that will just have to be repaid the following year through coding. Personally I would just ignore child benefit as an income and let the client repay when the bill comes through. This avoids messing about with coding year on year especially when there is a growing family and children being born. This is a potential nightmare as part payments through the year for newborns subsequently collected through coding is just a pain in the proverbial.
..and god help you when it comes to apprenticeships.
There are 2 types - 1 allows you to keep child benefit, maintenance etc., the other doesn't but in both you still retain parental responsibility and liability until 18/19.
IVA started March 2011, Completed March 2016 and certificate issued 11 days after final payment. It was not always easy but then some of the best decisions aren't.
Thanks for the replies. I will close up my IVA with what I owe.
The real bit that is disconcerting is that child benefit was classed as an income in the yearly I&E, and if we had stopped it it would have left us with £140 less each month to pay into the IVA. I may be thinking to much on this but I think the IVA company didn't want that reduction and told us to keep claiming.
I am still puzzled tho as I will be £1200 out of pocket because of this advice. Should I seek recompense from the IP or from the creditors - if at all ?
It would be the IP if yo go down that route as they are the middle person between you and the creditors and they gave the advice.
Ultimately it will come down to are you just glad to be out of the IVA or do you still want ongoing hassles.
IVA started March 2011, Completed March 2016 and certificate issued 11 days after final payment. It was not always easy but then some of the best decisions aren't.
I would ask the IP to vary the arrangement to allow it to close without the £800 being added. You can then repay HMRC and move on. I personally would not be happy at having to pay money into the IVA that I felt was not due and then also have to repay HMRC for the same funds.
