Had a similar problem and ended up paying back at an agreed rate over what will be some three years or so. It raises a question in my mind which I cannot resolve and which niggles away in the background - I was overpaid and that money was taxed prior to payment. My repayment is also taxed before it goes to the Treasury, or whoever. Since I do not receive this repayment, I am paying tax on money I don't receive OR I'm paying tax TWICE on the same money.
So, question is ... should one have to pay tax on the same money twice?
Any gurus out there with DEFINITIVE info??