| Govt bungles with tax credits, overpays nearly £2bn |
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According to figures published yesterday by the HM Revenue and Customs, overpayments accounted for £1.931 billion of the £13.529 billion that was paid out under child and working tax credit schemes.
Nearly £750m of the overpayments went to families that already had incomes of £20,000 or more per year.
The Revenue’s report has two more disturbing aspects: one was the numbers of recipients. Out of the total of 5.67 million claimants, 1.879 million were overpaid, 40,000 of them by £5,000 or more. Then there were underpayments too – 713,000 reported being paid less than they were entitled to (underpayments totalled £464,000).
The errors in tax credit payments imply that more than £1 in every six spent on the state benefit is going astray. The tax credit system was initiated by Chancellor Gordon Brown as part of an effort to redistribute large sums of money to the less well-off. Better-off families that had a joint income of up to £58,000 were also helped with as much as £140 a week towards childcare costs.
The current system is actually the replacement for a working family tax credit that turned into a disaster after a computer breakdown. In the financial year 2003-04, a computer crash resulted in overpayments to the tune of £600m and the helpline got clogged with calls.
According to HMRC, a huge bulk of the overpayments was due to the legacy of the 2003-04 computer problems and rising family incomes. In many cases, overpayments could be a result of human error/bungling by those who run the system. There was also the likelihood that many single parents and lower income families were cheating the system by understating their real income.
Apart from the numbers of overpayments, the other distressing thing is the ruthless way the Revenue is known to adopt in dealing with overpayments. Even though the average overpayment was over £1,000, the Revenue went about recollecting the excess. Around 300,000 families owed between £3,000 and £5,000.
Many of the recipients are not even conventional Revenue clients. In most cases, they were low-income families where the breadwinner was on a series of short-term contracts. All those who received overpayments were ordered to repay under strict conditions; many appealed against the order and only 1,600 succeeded in getting the Revenue to allow more relaxed terms for repayment.
Posted
on : Sun, 05 Jun 2005 08:15 GMT | General News
By : Chris Rowe
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