3 Compensation for claimants and recovery
of overpayments of tax credits
18. Problems caused by the new tax credit system
resulted in hundreds of thousands of the most vulnerable people
in society being put to inconvenience and not receiving the tax
credits to which they were entitled and which they needed. Members
of Parliament were inundated with constituents' complaints and
the Department's helpline had to be changed because it was overwhelmed.
The problems were extremely time-consuming and frustrating for
many people. The Department have compensated about 1,600 people
who could demonstrate that they incurred expenses as a result
of delays and to recognise worry and distress.[22]
19. The Department referred to their compensation
arrangements for claimants as being voluntary and spontaneous.
But they have not run a campaign to draw attention to the availability
of compensation for people who felt that they had suffered from
not receiving what they were due. The Department consider that
a specific campaign would be counterproductive and involve huge
expense sorting out the resulting bona-fide claims from the others.
They are relying instead on arrangements set out in their booklet
"How to complain about the Inland Revenue".[23]
In addition, the training of officials dealing with tax credit
cases will cover their duty to draw the attention of colleagues
to cases where individuals may be entitled to compensation. The
Department have undertaken to reinforce that message.[24]
20. The Department have procedures designed to recover
overpayments of tax credits. But they recognise that individuals
having to repay significant sums each week should not be left
destitute. They will not therefore recover overpayments if it
would involve hardship and they have published a code of practice
entitled "What happens if we have paid you too much tax
credit?"[25]
21. From April 2004 the Department will adjust tax
credit awards for the past year and make new awards for the next
year which will take account of changes in claimants' circumstances.
The process will probably bring to light further overpayments
which the Department will seek to recover.[26]
22. Some recipients of tax credits realised that
they were being overpaid and tried to repay the money. But the
Department declined the offer and told them that the family would
need to repay next year. The Department have since recognised
that such people should not be left to worry about a bill in the
future and that if they want to repay they should be allowed to.[27]
23. Tax credit payments can have implications for
individuals' entitlement to Income Support, Housing Benefit and
Council Tax Benefit. In some cases substantial overpayment of
tax credits has resulted in a level of income which has led the
Department for Work and Pensions to cancel other benefits. Recipients
then face the prospect of the Inland Revenue recovering the tax
credit overpayment in the next tax year, potentially leaving them
out of pocket.[28]
22 Qq 22, 27, 61 Back
23
Qq 109-110, 112, 114 Back
24
Q 115 Back
25
Qq 131, 63-64 Back
26
Q 135 Back
27
Qq 28-30, 135 Back
28
Q 137 Back
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