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12 Jan 2006 : Column 772W—continued

Tax Credits

Mr. Laws: To ask the Chancellor of the Exchequer on what basis the calculation was made that £2 million be written off from the £174 million of tax credit overpayments arising from software errors in 2003–04 and 2004–05. [19172]

Dawn Primarolo: As was noted in the Inland Revenue 2003–04 annual report and accounts, £37 million was written-off in respect of tax credit overpayments that had arisen as a result of a computer software error, where the overpayment was less than £300. Further analysis of the payment data within the tax credit system identified additional cases amounting to £1.85 million. This was rounded to 'some £2 million' in the Comptroller and Auditor General's standard report on the 2004–05 accounts of the Inland Revenue.

Mr. Laws: To ask the Chancellor of the Exchequer (1) what streamlined procedures were introduced earlier in 2005 to deal with disputed overpayments of tax credits; [19719]

(2) if he will place in the Library a copy of the instructions issued to Tax Credit Office staff prior to the introduction of the new procedures. [40453]

Dawn Primarolo: HMRC's policy on tax credits overpayments is set out in their code of practice 26. The Tax Credit Office streamlined the procedures to clear a backlog of cases where claimants had disputed recovery of an overpayment. The streamlined procedures involve a risk-based approach. As is normal practice with risk-based compliance activity HMRC does not publish details of the procedures.

Dr. McCrea: To ask the Chancellor of the Exchequer how many cases of tax credit fraud in Northern Ireland have been detected in 2004–05. [21356]

Dawn Primarolo: The information requested is not available.

Mr. Laws: To ask the Chancellor of the Exchequer what the total number of overpayments due to official errors in the new tax credit system is; and what their value was in each year since April 2003. [30567]

Dawn Primarolo: The information is not available in the form requested.

For the total number of disputed overpayments written off as a result of official error, I refer the hon. member to the reply I gave him on 27 October 2005, Official Report, column 497W, and on 15 November 2005, Official Report, column 1214W.
 
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Mr. Ian Taylor: To ask the Chancellor of the Exchequer if he will ask the Tax Office to provide claimants with a full explanation of how the demands for repayment of (a) working tax credit and (b) child tax credit are calculated. [32421]

Dawn Primarolo: HM Revenue and Customs (HMRC) code of practice 26 What happens if we have paid you too much tax credit?" explains the rates of recovery for overpayments of tax credits. From April 2006 HMRC will introduce an improved version of the tax credits award notice. This will include a section on overpayments and how any overpayment will be recovered.

Anne Milton: To ask the Chancellor of the Exchequer how many (a) child tax credit and (b) working tax credit applications are being processed; and how many of each were received (i) up to six months ago and (ii)more than six months ago. [36669]

Dawn Primarolo: The information is not available in the form requested. There is a single claim form for tax credits so it is not possible to differentiate between claims for child tax credit and working tax credit.

Mr. Frank Field: To ask the Chancellor of the Exchequer if his Department will extend the criteria for suspension of the recovery of a tax credit overpayment to include cases where (a) a letter has been sent by an hon. Member to the Paymaster General regarding a caseof disputed overpayment, (b) the Parliamentary ombudsman has commenced an investigation into a case where the claimant has been overpaid and (c) a letter has been sent by an hon. Member to the Tax Credit Office in Preston regarding a case of overpaid tax credits. [38626]

Dawn Primarolo [holding answer 19 December 2006]: Where a claimant wishes to dispute recovery of an overpayment, HM Revenue and Customs will initiate suspension of recovery following receipt of a letter or a form TC846 (request to reconsider recovery of tax credits) from the claimant; or a letter sent on behalf of the claimant, and with their authority.

Mr. Holloway: To ask the Chancellor of the Exchequer how many cases of forged tax credits there were in the Gravesham area in each of the five years before the Jobcentre Plus scheme was launched; and how many there were in the last year for which figures are available. [39453]

Dawn Primarolo: It is not possible to provide the information in the format requested.

Mr. Holloway: To ask the Chancellor of the Exchequer how many cases of forged tax credits resulting in prosecution have been reported relating to Jobcentre Plus in the Gravesham area in the last 12 months. [39454]

Dawn Primarolo: None.

Mr. Laws: To ask the Chancellor of the Exchequer pursuant to the answer of 2 December 2005, Official Report, column 804W, on tax credits, on what date was a written assurance received from EDS that the IT system would be fit for the purpose of supporting tax credits. [40452]


 
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Dawn Primarolo: EDS provided a certificate on 4 April 2003 confirming that the IT system was fit for the purpose of supporting tax credits and on 5 April 2003 EDS wrote to the Inland Revenue in similar terms.

Mr. Laws: To ask the Chancellor of the Exchequer how many people he estimates were entitled to, but did not claim, tax credits in each year since 2000–01; how much he estimates was unclaimed; and if he will make a statement. [41463]

Dawn Primarolo: Estimates of the number of families entitled to, but not claiming working families tax credit in 2000–01, 2001–02 and 2002–03, and the value of unclaimed WFTC entitlements, are available on the HMRC website at http://www.hmrc.gov.uk/stats/wftc/takeup_rates.htm (tables 1 and 2 of each annual publication). Analysis relating to 2003–04 is on-going and we expect this work to be completed towards the end of 2005–06.

Mr. Paul Goodman: To ask the Chancellor of the Exchequer what estimate he has made of the cost of not reclaiming overpaid tax credits from those whose incomes rise by less than £25,000. [41714]

Dawn Primarolo: I refer the hon. Member to the answer given to the hon. Members for Birkenhead (Mr.Frank Field) and for Yeovil (Mr. David Laws) on 13 December 2005, Official Report, column 1836W.

Tax Debt

Dr. Strang: To ask the Chancellor of the Exchequer how HM Revenue and Customs traces those who owe tax for whom it has an incorrect address. [41028]

Dawn Primarolo: Her Majesty's Revenue and Customs (HMRC) use a number of ways to trace those who owe tax for whom it has an incorrect address.

Tax Investigations

Mr. Bone: To ask the Chancellor of the Exchequer what provisions there are for a taxpayer to offset against taxes the cost of tax investigation by HM Revenue and Customs. [41174]

Dawn Primarolo: Costs arising out of an investigation into taxes are deductible in calculating the taxable profits of a business, if those taxes are paid as part of the expenses of carrying on the business. In addition, the normal expenses incurred in preparing accounts and calculating the income tax or corporation tax liabilities in respect of the profits of a business are deductible in calculating its taxable profits.

Additional expenses arising out of an investigation by HMRC are not deductible if the investigation reveals additional income tax or corporation tax liabilities arising from negligent or fraudulent conduct.
 
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Mr. Bone: To ask the Chancellor of the Exchequer what criteria are used to decide which taxpayers will be subject to tax investigation. [40925]

Dawn Primarolo: Cases for direct tax investigation into Self-Assessment returns are selected according to the risk of loss of duty to the Treasury.

The only exception to this is the small proportion of cases that are statistically selected at random in order to police the system while at the same time providing information as to the extent of compliance in the general population.

For indirect taxes, investigation" is the term specifically used to describe the Department's activity to combat cases of suspected fraud.

The selection of taxpayers for mainstream assurance contact, including visits, is based upon interpretation of the Department's risk analysis systems, past results and other information and intelligence.

The Department focuses its contacts not only on the wilfully non-compliant through tax investigations, but also on those taxpayers needing education and support through an educational and enabling programme.

Mr. Bone: To ask the Chancellor of the Exchequer how many tax investigations were carried out in each year since 1997. [40927]

Dawn Primarolo: The number of tax investigations carried out in each year is as follows:
Year ending 5 April:Number
1999250,415
2000510,103
2001469,750
2002448,650
2003313,231
2004298,819
2005279,302

For the years ended 5 April 1997, 5 April 1998 and 5 April 1999 the IR did not report the number of tax investigations carried out but reported the number of tax investigations settled annually. The respective annual settlement figures are 96,905, 93,558 and 79,133,

Mr. Bone: To ask the Chancellor of the Exchequer how much additional tax was recovered by the Inland Revenue as a result of tax investigations in each year since 1997. [40929]

Dawn Primarolo: The total additional liability brought into charge as a result of HMRC tackling non-compliance is as follows:
5 April:£ billion
19974.3
19983.9
19994.0
20005.4
20014.5
20023.8
20034.3
20044.5
20055.7









 
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It should be borne in mind that not all of these liabilities may be collected due to a variety of factors, for example insolvency. We have no data indicating what proportion of these liabilities is ultimately collected.

Mr. Bone: To ask the Chancellor of the Exchequer in respect of how many people tax investigations resulted in a recovery of income tax of (a) nil, or negative tax recovery, (b) under £500, (c) between £500 and £1,000, (d) between £1,000 and £2,000, (e) between £2,000 and £3,000, (f) between £3,000 and £4,000, (g) between £4,000 and £5,000 and (h) over £5,000 in each year since 1997. [40930]

Dawn Primarolo: These statistics are not routinely kept or reported and the costs involved in extracting the data would be too prohibitive.


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