3 Customer service
30. The service provided to tax credit claimants
has been poor. Members of Parliament continue to receive too many
complaints from constituents about the administration of the scheme.
The problems have been extremely time-consuming and frustrating
for some people. Members have also had examples where the Department
appeared not to have fully examined the case, or had placed the
onus on the individual to provide detailed records in order to
prove it had made a mistake. Our predecessor Committee's report
of July 2005 noted that these problems have impaired the Department's
reputation.[40]
31. The Department is taking steps to improve performance.[41]
It writes off overpayments on the grounds of official error where
it has made a mistake and the claimant could reasonably have thought
the payment was correct. It has sought to clarify this test and
has recently provided further guidance of what it means by "reasonable".[42]
32. Claimants can appeal to the Department if they
dispute its decision to recover overpayments. The number of disputed
overpayments grew significantly in 2005-06, as shown in Table
3. There was also a big increase in the number of overpayments
written-off as a result of disputes, and in 2005-06 almost half
of all disputes were resolved in the claimants favour. Table
3: Overpayments overturned on appeal
| Overpayments disputed
| Overpayments written off as a result of the dispute
|
| 2004-05
| 215,000 | 10,300 (5%)
|
| 2005-06
| 367,500 | 160,500 (44%)
|
Source: HMRC
33. If claimants are unhappy with the Department's
decision on the recovery of overpayments, they can appeal to the
Parliamentary Ombudsman. But the Department does not analyse how
its decisions on overpayments are changed following intervention
by the Ombudsman's office.[43]
34. The Department has improved the accuracy of its
processing of information since the introduction of tax credits.
But it does not know how much it has overpaid and underpaid through
inaccurate processing.[44]
To find out would require an examination of a large sample, which
the Department considers would entail a disproportionate use of
resources.
Software problems
35. The design of the tax credits system results
in overpayments, but there have also been unforeseen overpayments
due to software errors. In October 2005, there were still 199
known software errors in the tax credit computer system. The majority
of these errors have since been resolved.[45]
36. The Department retains tax credit claims on its
computer systems for six years. It reviews system capacity on
a regular basis and is not aware of any claims that have been
deleted because of capacity issues.[46]
40 Committee of Public Accounts, Thirty-seventh Report
of Session 2005-06, Inland Revenue Standard Report: New Tax
Credits, HC 782 Back
41
Q 108 Back
42
C&AG's Report, para 2.17 Back
43
Ev 24-25; Qq 148-149 Back
44
C&AG report, para 2.41 Back
45
Ev 23-24; Q 77 Back
46
Qq 125-129 Back
| 
