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14 January 2009

Tax credit chaos causing havoc for families as 1.8m overpaid more than once

John Barrett, Liberal Democrat MP for Edinburgh West, today hit out at Government maladministration after Liberal Democrat research revealed that 1.8m families have been overpaid tax credits more than once in the last four years

The figures, released in a Parliamentary answer, also reveal that over half a million families have been underpaid more than once over the same period.

Overpaid tax credits are then clawed back by the Inland Revenue many months later, throwing families’ budgets into disarray.

The figures show that:

Repeat overpayments

  • 1.8m families have been overpaid tax credits more than once in the four years that the system has been running, an increase of 400,000 in just one year. That is one in five of all families who have claimed in the same period
  • Over 60,000 families have been overpaid more than three times

Repeat underpayments

  • 555,000 families have been underpaid more than once since 2003, an increase of 150,000 families in just one year
  • 82,000 families have been underpaid more than twice
  • 6,000 families have been underpaid more than 3 times  

Commenting, Work and Pensions spokesperson John Barrett said:

“These figures show that a scheme that was meant to provide support for hard-pressed families has turned into a nightmare for millions.

“Almost every week I have constituents at my surgeries whose lives have been made a misery be tax credit error.

“The complexities of the tax credit system mean it is almost impossible to know if you are being paid the right amount.

“Even people who have supplied all the correct information can find that they have been overpaid due to Inland Revenue errors and then face repaying thousands of pounds that they have already spent.

“The system needs to be changed so that payments are fixed for at least six months at a time so that people know where they stand.”

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This website was established while I was a Member of Parliament. The site content is being kept online as a source of information, but all forms / email have been disabled.