Leading children’s charity makes fresh call for amnesty on anniversary of tax credits
6.04.04

…first year of the scheme ‘blighted’ with a raft of problems…

Leading children’s charity the Child Poverty Action Group have today made fresh calls for an amnesty of tax credit overpayments on the anniversary of the new schemes implementation.

Today marks the first anniversary of the tax credits scheme, a system that is key to the Government’s target to abolish child poverty. “The first year of the scheme has been blighted with a raft of problems from delayed payments, payments without award notices and in-year overpayments.” said CPAGs Welfare Rights Manager Paula Twigg.

“These problems have resulted in many low-income families suffering hardship. Many claimants have seen awards adjusted automatically to recover an overpayment discovered during the course of the tax year without any explanation of how the overpayment arose, leaving some with weekly incomes substantially below income support levels.” she said

Between now and June the Inland Revenue will be contacting tax credit recipients to establish their entitlement for the tax year 2003/04. Claimants will at the same time learn how much they have actually been overpaid for the year and how much they will have to pay back.

Awards will not be adjusted to reflect the circumstances and rates for the year 2004/05 until the renewal process has been finalised – this will involve claimants responding to the information requested by the IR within a set time. Any delay or failure to respond is likely to increase the level of any in-year overpayment.

Also expected this year is the ‘migration’ of income support claimants onto child tax credit. Once this happens child tax credit will become the key form of financial support for (low-income) families with children. It is therefore crucial that the problems with the administration of the scheme are resolved quickly and that the policy on recovery of overpayments is operated fairly, with transparency and in a way to minimise hardship.

“Many of the overpayments in the first year of the scheme’s life have been caused by official error and a number of factors, such as delayed payments, payments without award notices, incorrect and unclear award notices, have made it impossible for claimants to know what their correct award should be.” said Paula Twigg. “Yet the IR has sought to recover the majority of these overpayments.”

In Parliament, an Early Day Motion 325, is calling for an amnesty on the recovery of overpayments in the first year of the scheme. 95 MPs have signed this EDM and CPAG is pressing once more for the Government to grant this amnesty. Such a move will relieve hardship for low-income families and should help restore some confidence is the system that has been heralded as having a major role to play in the pledge to eradicate child poverty.

For further information

Ashley Riley
Press Officer
Tel 020 7812 5216
Mobile 07811 324339
ariley@cpag.org.uk

Notes for edtiors

Early Day Motion 325 states: “That this House welcomes the government's pledge to end child poverty by 2019; but is concerned that the problems in the administration of the tax credits system may undermine the aim of the scheme to reduce child poverty; is concerned that these problems have resulted in unnecessary overpayments, which have led to difficulties and hardships for families with children when these overpayments are recovered automatically from future tax credits entitlements; and calls on the Inland Revenue to introduce an amnesty in respect of all overpayments of tax credits made in the tax year 2003/4 unless the overpayment was caused by fraud on the part of the claimant.”

CPAG promotes action for the relief, directly or indirectly, of poverty among children and families with children. We work to ensure that those on low incomes get their full entitlement to welfare benefits. In our campaigning and information work we seek to improve benefits and policies for low-income families, in order to eradicate the injustice of poverty