Thousands of North Somerset families repaying £1,000 in tax credits

1.19.49pm BST (GMT +0100) Thu 2nd Jun 2005

Liberal Democrat Councillor Mike Bell today slammed the Government over the administration of the tax credit system, following astonishing figures published on the number of overpayments made by HM Revenue and Customs. In total, a third of all awards for 2003/04 were overpayments, leaving nearly 2 million families repaying on average more than £1000 each.

In North Somerset alone, of the 18,600 tax credit claims 5,600 were overpayments (30.1%), with the average family paying back £1,053 each.

Commenting on the figures, Mike Bell said:

"These figures are unprecedented and reflect the serious problems not only with the computer system, but inherent within the new tax credit system.

"I know many local people and employers are concerned about this issue. There are many cases where the tax credit office has attempted to claw back money that had been overpaid as a result of internal administrative error rather than customer misinformation.

"Too many families are having their budgets thrown into chaos by the tax credit office, causing serious problems and hardship especially for those on low incomes.

"What we do not yet know, however, is how many of these overpayments were a result of official error and how many the Inland Revenue will write off.

"Last week Treasury Ministers signalled changes to the way overpayments are clawed back. The statement was an implicit admission that the Inland Revenue have not been acting responsibly in the past. But new guidance alone will not solve this problem.

"The policy of reassessing income at the end of the award is flawed and a return to a system of fixed awards would end this bureaucratic nightmare for many families."