2 The support and advice provided
to claimants |
6. HMRC provides written guidance to tax credits
claimants and offers support through its helpline to help them
manage their claims. However, our experience from helping our
constituents is of problems
with the accuracy and consistency of HMRC's advice.
Citizens Advice has also identified inaccurate information from
the tax credits helpline through a mystery shopping exercise.
This experience seems to be at odds with HMRC's
estimates that only 2.5% of error is due to errors by HMRC officials.
HMRC's reporting of these figures does not appear to be consistent
with the way the Department for Work and Pensions reports the
breakdown of claimant error, administrative
error and fraud for other benefits.
7. Providing accurate advice and support is important
for both claimants and the taxpayer. Without this claimants may
provide HMRC with the wrong information which in turn may lead
to overpayments that HMRC will seek to recover. Some claimants
find it difficult to understand why such debts have occurred and
struggle to cope with the resulting repayments.
HMRC acknowledges that the level of tax credits debt created is
significant and challenging.
In 2011-12 HMRC wrote off £1.7 billion in tax credits debt
that it could not recover from claimants.
8. HMRC could reduce overpayments and error through
providing better quality information and advice when people make
a claim or report a change in their circumstances.
Voluntary sector organisations, such as Citizens Advice, have
a great deal of knowledge of how claimants experience the tax
credits system and what areas they struggle to understand. HMRC
already works with the voluntary sector, but recognised that it
could do more to build on this relationship and work more closely
to share information at a local level.
HMRC's front-line staff also have expertise of claimants' experience
of the tax credits system. HMRC is working to ensure that staff
are supported to feedback their views of what
does and does not work.
It is clear from the evidence we heard, particularly in regard
to claimants not being able to recognise when they meet HMRC's
definition of living as a couple, that guidance and support
needs to improve.
9. HMRC has to make decisions on the amount of
money claimants are entitled to, using the evidence it holds which
may be incomplete, outdated or incorrect.
This leads to claimants appealing against HMRC's decision and
providing additional evidence. We heard from Citizens Advice that
HMRC is making retrospective decisions which should have been
made when the claim was made or when a change was reported.
When a decision is appealed it is important HMRC deals with it
quickly as during the process awards are reduced or stopped leading
to people suffering financial difficulties, hardship and distress.
In 2011-12, around 8,000 people lodged an appeal, of which 40%
10. HMRC has increased significantly the number
of tax credits claims it checks for error and fraud from 123,000
in 2008-09 to 1.6 million in 2011-12.
It has not, however, always considered the impact this would have
on the volume of appeals it receives. For example, it took action
in 2011 to identify claimants who had not told HMRC that they
were in a relationship. HMRC undertook 100,000 checks to identify
undeclared partners and ended 40,000 tax credits awards.
However, HMRC failed to put in place adequate resources to handle
the subsequent increase in appeals. Citizens Advice told us that
this had led to a huge increase in the number of lone parents
seeking their assistance
and that some appeals had taken over six months to resolve.
HMRC accepted that it had not responded sufficiently quickly enough
in these cases.
14 Qq 40, 101, 133 Back
Q 4 Back
Qq 30-35 Back
Qq 29-30 Back
Q 40 Back
Q 40 Back
Q 40 Back
Q 1 Back
Qq 134-135 Back
Q 134 Back
Qq 9, 13-15 Back
Q 37 Back
Q 9 Back
Q 16 Back
Q 39 Back
C&AG Report, paras 2.10, 4.3 Back
Q 95 Back
Q 13 Back
Qq 13, 15-18 Back
Ev 23 Back