Dead Men Left

Tuesday, July 12, 2005

Tax credits: the scale of the problem

Returning to an older story:

Opposition MPs launched a scathing attack last night on the government's tax credit scheme after the Treasury revealed figures showing almost all the 2m families overpaid tax credits were forced to pay the money back.

More than 98% of families had their tax credit payments stopped or cut, according to official figures obtained by the Liberal Democrats. The overpayments, which often resulted from computer errors or mistakes by Inland Revenue staff, gave rise to debts amounting to more than £1,000 on average. For the 36,000 families who saw their cases quashed by the Inland Revenue, the write-offs averaged £1,028 each.

£1,000 on average: that's a dent in even a large family income, never mind the poorer families tax credits were supposed to target. And notice the write-off rate: 36,000 so far, out of two million.