Action plan to improve tax credits sent to Ministers
12.10.05

The tax credits system must be urgently reformed if public confidence in the system is to be restored, a leading children’s charity will say today.

Following a series of critical reports from the National Audit Office, the Public Accounts Committee, the Parliamentary Ombudsman and Citizens Advice on the way the tax credits system has operated, the Child Poverty Action Group (CPAG) is today publishing its First Steps to Reform Tax Credits.

The charity’s action plan has been sent to Paymaster General Dawn Primarolo MP and comes on the day when the Chief Executive of HM Revenue & Customs David Varney is expected to face tough questioning on the new tax credits system by Parliament’s Treasury Select Committee.

CPAG’s recommendations include:

• An amnesty on all overpayments up to April 2005 where fraud has not been proven.
• Introducing a right of appeal against a decision that there has been an overpayment.
• No automatic recovery of overpayments – the Revenue should give claimants a chance to challenge an overpayment recovery before the money is clawed back. CPAG recently threatened legal action against Revenue & Customs unless they change the way overpayments are recovered.
• A fair recover of overpayments so that tax credit awards are not wiped out altogether leaving families in extreme hardship.
• Improved communication and advice for claimants, including basing some Revenue & Customs staff in local Jobcentre Plus offices.
• Encouraging take up of tax credits.

Kate Green OBE, Chief Executive of CPAG, said today:

“Tax credits are helping to reduce child poverty. Millions of families with children are benefiting and more parents are finding that tax credits help to make work pay. However, they are complex to understand and their administration so far has been poor.

“The Government must address the administrative problems as a matter of urgency so that families no longer have to battle against incomprehensible decisions and impenetrable bureaucracy. CPAG is also proposing a number of vital reforms to the system including an amnesty on all overpayments up to April 2005 where no fraud has been proven.

“CPAG wants to help the Government make the tax credits system work. If fundamental changes are not made, then tax credits could go the way of the CSA with public confidence in the system fatally undermined. Millions of people rely on tax credits and many of the poorest families in the country would then lose out.

“CPAG’s six steps to reform tax credits are sensible and long-overdue reforms and we hope the Government will give them serious consideration. We also hope that Mr Varney will take note of our recommendations when he appears in front of the Treasury Select Committee later today.”

 

Notes:

Download a copy of the briefing: First Steps to Reform Tax Credits (143 KB Word file)

For further information please contact:
Alex Belardinelli
CPAG Press Officer
Tel. 020 7812 5216 or 07816 909302
abelardinelli@cpag.org.uk