Tax credits 'need reform'
Catherine Gaunt
Wednesday, June 7, 2006
Children's charities called for an overhaul of the tax credit system last week as the Government confirmed that just under two million families were overpaid 1.8bn in the past year. The Child Poverty Action Group (CPAG) said it was concerned about the number of families forced to hand back money when overpayments are made.
The Child Poverty Action Group (CPAG) said it was concerned about the number of families forced to hand back money when overpayments are made.
It said that more reform was necessary to restore the public's confidence in tax credits, on top of planned changes to the system announced in Chancellor Gordon Brown's Pre-Budget report (News, 15 December 2005).
Parental income can now increase by up to 25,000 before claimants need to inform HM Revenue & Customs (HMRC) of any change to their circumstances, a measure intended to reduce the number of people receiving overpayments.
The Government said that where the overpayment was its own mistake, people would not be forced to pay money back.
However, the CPAG said that families facing the prospect of having to make repayments should have a statutory right of appeal and the opportunity to seek face-to-face advice.
Chief executive Kate Green said, 'Tax credits have helped millions of low-income families, but they have not always worked as successfully as they should have. Behind this 1.8bn figure are the stories of thousands of families who have struggled to survive when tax credit payments have been clawed back by the Revenue.'
A spokesperson for One Parent Families said, '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 HMRC means that we do not yet know the extent to which these measures will help.'
