If and when the first dispute stage fails, move on to 2nd Tier Dispute & Complaints It is important to make clear that you are continuing the dispute, not just making a complaint.
Please note that there is now a 30 day time limit to get a 2nd tier response sent in.
The basis for continuing the dispute should be that you do not feel all the relevant issues have been considered. HMRC's previous response will say they will only consider a 2nd tier dispute if you provide additional information and 'new evidence'. As such, this is the stage where I recommend giving fuller detail.
I used to recommend that people wrote a Case History for this stage, but I no longer feel that is necessarily unless your case is especially complex (i.e involves several different complex issues). Instead I now recommend only responding to the points HMRC raise in their previous response and any relevant issues that have been ignored, in a typical letter format.
Include your address, your National Insurance number and any reference HMRC used on their previous reply. Open the letter by heading it '2nd Tier Dispute and Complaint', and stating that you 'continue to dispute the alleged overpayments'. Then break the letter down into tax-year sections. i.e. 2010/11.
The bulk of your letter should be involve as many of the following as are relevant:
Usually the most common and important task is to aim to prove you did:
Being able to prove you did in fact take these actions helps to prove you meet your responsibilities under the 'Responsibilities Test'.
Note that HMRC have responsibilities under this test as well. Ones that, if they fail them, should mean all relevant overpayments are dropped. HMRC failing to act on claimants notifications is a huge and common issue.
Despite their constant untruths about this issue, the failure is usually either HMRC failing to respond correctly, the use of old data, or delays in processing information.
It's important to understand the significance of Award Notices. HMRC basically use them as a butt-covering measure. They are issued to claimants when a change is notified/occurs, for the claimant to 'check and correct'. If HMRC make a mistake in updating after a notification, the claimant is expected to spot it on the award notice and correct it within 30 days of the notice. As such, during a dispute, HMRC will repeatedly refer to the date of award notices, even if it is not particularly relevant to the issues you are arguing.
Look for evidence that supports your points / defence in the data you should have received by now. See the end of Step 1b for a description of what should be included in the SAR data bundle.
If you have not received your data (or some appears to be missing) by the time HMRC respond to your TC846, I suggest sending a short, simple letter in reply to acknowledge receipt of their letter, but to complain that the lack of data supplied affects your ability to dispute. And that because it is HMRC that are holding up the dispute, no response deadlines should be applied until after all the data has been supplied to you.
Look for proof that you did meet your Responsibilities Test and / or HMRC did not meet theirs:
To ‘translate’ the data for dispute purposes, I separate the documents out in the Tax Years. Please note that I don’t actually focus on what payments were made when etc. (so please do some quick maths to check that they did pay you at least the figure they claim you are overpaid by).
At this point please remember that HMRC operate each year as a separate account and that their ‘year’ runs from the 6th of April one year to the 5th of April the following year. So you will check documents not just for the date they were produced / sent but also for the date / tax year they are relevant for.
If you have experienced health problems during the time the overpayment occurred, either your own health or a family member’s that affected you, do please mention that in your case history. Tragedy, trauma, stress, hospital visits, can all impact on what expectations can be made of you during that period.
Mental health is a common issue and one that people don’t often raise, despite it having massive affects on how they can cope. A letter from your doctor would be very useful if your doctor was aware that you were experiencing these problems; either one that just states your diagnoses / symptoms or if possible (if you doctor is willing to be extra helpful) one that details the effects the illness had on you and what affects the continuing overpayment dispute is likely to have on you. HMRC are also expected to "deal with mental health cases carefully and sympathetically to avoid distress to the customer."
So, make sure to include, if appropriate:
I recommend posting your letter to the address the HMRC response came from.
If you experience demands to repay during disputing please see this page Harassment.
This stage is only over if and when they write to inform you they deny your dispute. Until they make this statement, all the other external agencies you can present your case to will keep bouncing your case back to HMRC.
Please note that it is common to receive a partial success around this point. i.e. one or more portions of the overpayment may be written off if HMRC accept they caused the event that created that particular portion. This is good and typical of most overpayment disputes, as they are won bit-by-bit, one round/portion/cause at a time.
Now have a look at Step 3 and determine whether you think getting your MP involved would be useful.