Tuesday, 24 March 2009

The damned Tax Credit system.

Anyone who believes that our tax and benefits system is working well needs to read this article in today's Guardian:

"Families fear claiming tax credits, warn MP's"

What MP's are saying is that families are not claiming tax credits because they fear having to repay overpayments because of mistakes either made by themselves in claiming the tax or more likely errors made by HM Revenue and Customs.
To illustrate the point Revenue and Customs have paid out £85 billion to deserving families since its introduction in 2003, BUT HMR&C have OVERPAID something like £7.3 billion and UNDERPAID more than £2 billion.

The Public Account Committee believe that in some parts of the country up to a third of people entitled to receive tax credits do not claim because they fear that errors will result in them being in debt to Revenue & Customs...and to be honest aren't they the last people you want to be in debt to?

I wonder what the tax credit take up is in Wales...being that its one of the poorest areas of the country?

From my position as an advisor with the Citizens Advice Bureau I can empathise wholeheartedly with those people who do not trust the HMR&C in calculating tax credits properly...it would be interesting to know what proportion of clients seen by Citizens Advice have tax credit problems. One of the worst examples of maladministration by HMR&C which I have come across is that of a lady who is still waiting for her child tax credit 8 months after the child was born...and you can only back date 3 months...the reason HMR&C lost the child's birth certificate!!

Another potential pitfall of tax credits are those families where there has been a redundancy...isn't it bad enough losing your job and having to live on a paltry £60 a week JobSeekers Allowance...but if you were receiving Working Tax Credits when you were working you need to tell them when you cease working because you are no longer entitled to that tax credit. With everything else to worry about, how many redundant people remember to tell HMR&C about their change of circumstances?, but if they don't...prepare for a nasty shock and an overpayment bill. It's what you call 'kicking someone when they are down'

So there you are; my thoughts on the workings of our so called 'efficient targeted' welfare benefit system...!!

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