News

22nd June 2005

Tax credit problems hitting families

The Citizens Advice Bureau (CAB) has today slammed the government's Tax Credits system saying it was subject to "completely unacceptable" errors.

The charity said that a third of recipient families have been overpaid and many forced into poverty when HM Revenue & Customs (HMRC) takes back overpayments, over half of which topped £500.

And in another report, the Parliamentary Ombudsman accused Paymaster General Dawn Primarolo of failing to give a clear picture of the problem to MPs.

The Ombudsman have joined the CAB calling for the overpayments to be written off.

The CAB said that HMRC had "failed to live up to its own standards of information, clarity and efficiency of service" in the administration of tax credits.

The report was based on 150,000 cases handled by the charity, the majority of which complained about the overpayments of tax credits.

The CAB said the "huge overpayments" were due to HMRC system failings.

HMRC recently admitted that of £13.5bn paid out last year, £1.9bn consisted of overpayments.

Citizens Advice have called for an amnesty instead of trying to claim back the overpayments.

They said, "In the light of the historic level of administration errors, more overpayments should be written off."

They also called for better training for HMRC staff, better advice for claimants and a "proper independent right of appeal" against HMRC decisions.

Meanwhile, in her report, Parliamentary Ombudsman Ann Abraham accused Ms Primarolo of failing to give accurate information when questioned about overpayments in the House of Commons in February.

She also said she was unable to say how many overpayments were due to government mistakes and how many were down to delays in claimants reporting a change in circumstances.

She also called for an amnesty, saying "This would be a sensible and proportionate response to the situation and would give much-needed relief to people who, in many cases, have been caused considerable distress and hardship."

In response to the reports, the HMRC said millions of families had benefitted from tax credits.

"While there were much-publicised IT and processing errors that occurred when the system was introduced two years ago, HMRC now has a new IT partner and the system is stable," an HMRC spokesperson told BBC.

"Over six million families and 10 million children are currently benefiting from tax credits, but we take all complaints very seriously and we're committed to doing everything we can to reduce the number of complaints."

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