Government must take rapid action on tax credits overpayments

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31/05/06 Revenue figures out today showing the number of tax credits overpayments continues to be unacceptably high, will further dent lone parents' faith in the administration of the system, national charity One Parent Families is warning.

Today's HMRC figures show almost two million claims (1,958,000) were overpaid a total of £1.7 billion in 2004-05 (compared to 1,879,000 claims overpaid £1.9 billion in 2003-04).

One Parent Families spokeswoman Jane Ahrends said:

"Overall tax credits have had a major impact in reducing poverty among lone parents and their children but for many families they have failed to deliver either a seamless system of support or a stable income.

"Overpayments have left thousands of one parent families devastated as the Revenue has slashed ongoing payments in order to claw back the money. Changes announced in the Pre Budget Report are intended to increase the stability of the system and reduce the number of overpayments but the lack of clear analysis of the cause of overpayments by the Revenue means that we don't yet know the extent to which these measures will help. Unless the Government can rapidly get the system running smoothly so that families receive the right amount of money at the right time, it will need to consider returning to a fixed-award system."

The charity is also calling for:

the introduction of a right to an independent appeal of the decision to recover an overpayment
a fundamental review of the design and organisation of the IT system underpinning tax credits
clarification of how an overpayment will be recovered when couples separate to ensure that lone parents are not disadvantaged
a change whereby claimants are sent a letter informing them of the cause of an overpayment and allowing them 30 days before it is recovered.

FURTHER INFORMATION FROM JANE AHRENDS ON 020 7428 5416 / 0788 1951138

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