Revenue must come clean on level of tax credits error

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06/06/06 One Parent Families welcomes today's call by the Treasury Select Committee for the Revenue to publish a comprehensive analysis of the incidence of official error and IT system error, along with a breakdown of all tax credits overpayments and their causes. The charity's research on 100 lone parents from May - July 2004 showed that of the 28% who were overpaid tax credits, 80 per cent of these overpayments were due to official error.

Commenting on the report today, One Parent Families' Chief Executive Chris Pond says:

"Tax credits have been extremely effective in reducing poverty among lone parents and enabling many to enter employment but the delivery is shot through with fundamental problems. The clawing back of overpayments has brought serious hardship and distress to the very families the system was designed for. 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. Tax credits will not achieve their potential for tackling child poverty unless the Government acts now to resolve the deep administrative flaws in the system.

"The case is now clear for giving claimants a 30-day pause before recovery of an overpayment and introducing a right to appeal to an independent tribunal against a decision to recover an overpayment so that the Revenue is no longer judge and jury on disputed overpayments. Until a full analysis of the incidence of official error is made available, we cannot be sure that claimants are not being blamed for overpayment problems that can in fact be laid at the Revenue's door."

HMRC figures published earlier this week show almost two million claims (1,958,000) were overpaid a total of £1.8 billion in 2004 -05 (compared to 1,879,000 claims overpaid £2.2 billion in 2003-04).

One Parent Families also wants to see:

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

Notes to Editors:

One Parent Families press contact: Jane Ahrends 020 7428 5416 / 0788 1951138

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