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What to do if…
you are told your tax refund will be taken to pay a debt you did not expect

Short answer

Assume it might be genuine and might be a scam until you verify it safely. Sign in to your HMRC account directly (not via any link), then get the debt details (tax type, tax year, amount) before you agree to pay anything.

Do not do these things

  • Do not click links, scan QR codes, or call numbers from the message/letter if you’re not sure it’s genuine.
  • Do not pay a “fast-release fee,” “processing charge,” or “verification payment” to get your refund.
  • Do not share your HMRC login, bank details, or card details because of a text/email/call claiming there’s a rebate/penalty.
  • Do not assume it’s your debt just because the message uses your name or a realistic amount.
  • Do not ignore it (delays can make fixing mistakes harder, even if you eventually prove it’s wrong).
  • Do not borrow urgently or sell anything today just because you feel pressured—verify first.

What to do now

  1. Verify the message safely (anti-scam first).
    Using your own browser, go to GOV.UK and sign in to your HMRC online account (Personal Tax Account and/or Self Assessment). Do not use any link in the message. Look for a notice, statement, or secure message showing your repayment and any reduction/set-off.

  2. Write down exactly what you’re being told (before you call anyone).
    Note: the repayment amount you expected, the amount being taken, dates, and any reference numbers. If you can see the entry in your online account, screenshot/save it.

  3. Work out which “bucket” it falls into (this determines the right fix).

    • If you are NOT in Self Assessment: you may be dealing with a P800 tax calculation or a Simple Assessment letter that explains an over/underpayment.
    • If you ARE registered for Self Assessment: you typically won’t get a P800/Simple Assessment for this; the over/underpayment is usually reflected in your Self Assessment account/bill.
    • Tax credits overpayment recovery: HMRC can still recover legacy tax credits overpayments, even though tax credits have ended for new claims.

  4. Get a clear breakdown using official contact routes.
    Contact HMRC using official GOV.UK contact details (not the number on a suspicious letter/text). Ask for:

    • what the debt is for (tax/benefit type and the tax year/period),
    • how it was calculated,
    • where and when the notice/decision was issued (and ask for a copy if you don’t have it). Keep a call log (date/time, who you spoke to, what was said).

  5. If you think it’s wrong, start the matching challenge route immediately.

    • Tax credits overpayment: use HMRC’s “dispute recovery of an overpayment” process (often referred to as TC846 online/by post). Gather your award notices and notes of when you told HMRC about changes or spotted mismatches.
    • P800/Simple Assessment (non-Self Assessment): tell HMRC what you believe is wrong (for example, missing income details, duplicated employments, incorrect tax code history) and ask what evidence they need to correct the calculation.
    • Self Assessment: check the specific tax year in your SA account, then contact HMRC about the entry causing the balance/set-off (misapplied payments, duplicated income, amended figures, penalties/interest you dispute).

  6. If you suspect fraud or account compromise, lock down access.
    Change your HMRC sign-in credentials, review any contact/email/phone changes on your account, and report the suspicious contact through the official HMRC scam reporting route.

  7. If the debt is yours but you can’t afford it, ask about a payment plan (often called “Time to Pay”).
    If you still owe money after the set-off (or expect further collection), use the GOV.UK “cannot pay your tax bill on time” route to request a payment plan. Ask for confirmation of any arrangement in writing.

  8. If losing the repayment will cause immediate hardship, protect essentials for the next 48 hours.
    List what must be paid first (housing, energy, food, travel to work, critical medicines). If you’re about to miss a payment, contact that provider and ask for a brief hold/arrangement while you get the HMRC paperwork clarified.

What can wait

  • You do not need to decide today whether to make a formal complaint—first get the facts and paperwork.
  • You do not need to commit to a long-term repayment strategy today—first confirm what the debt is and whether it’s correct.
  • You do not need to pay anyone to “help you release the refund.”
  • You do not need to gather every document immediately—start with the notices/amounts and then collect supporting paperwork once you know what HMRC is relying on.

Important reassurance

A surprise reduction in a tax repayment is upsetting, especially when you weren’t expecting any debt. This is often a records-and-process issue (a notice you didn’t see, a mismatch in information, or an automatic set-off), and you’re entitled to a clear explanation before you accept it.

Scope note

This is first steps only: verify safely, prevent scam losses, identify the debt type, and start the right dispute or payment-plan route. Later decisions may need specialist debt or tax help, but you don’t need to choose that in the first hour.

Important note

This guide gives general, practical steps and isn’t legal or tax advice. Processes vary by the type of tax/debt and your circumstances. If you’re unsure anything is genuine, use only official GOV.UK channels and your HMRC online account to verify.

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