• What proportion of appeals against overpayments of tax credits have been refused since april 2006?
  
  Over the period April 2006 to the end of January 2007, there have been around 303,000 disputed overpayments. Over the same period, Her Majesty’s Revenue and Customs has written off 8,600.
  
  
• .... The Paymaster General was asked what proportion of appeals against the overpayment of tax credits had been refused and she has not managed to answer that question yet. It would be helpful to the House if she did so, so we could see how well the system is working.
  
  I thought that it was helpful of me to tell the House that 303,000 overpayments were disputed, 8,600 of which were written off.
  
  
• What proportion of appeals against repayments of tax credits have been refused since April 2006.
  
  As the hon. Gentleman will have heard me say ... recovery of the tax credit overpayment can be disputed. However, if the process has been settled and the dispute has not been upheld, the money is recovered.

One MP referring to an “over-complicated tax credit system” and “the current method of adjudicating overpayments” puts the question “(i)s not this over-complicated clunking mess crying out for wholesale reform”?

Dawn Primarolo replies “I look forward to the hon. Gentleman explaining to the 6,300 families in his constituency, including 10,700 children, why he wants to take tax credits away from them.”

This highhanded evasion and attempt at deflection is breathtaking (but all too familiar) in its arrogance. The Paymaster General has consistently refused to acknowledge any fault in the Tax Credit system and this refusal to engage defies all reason and betrays a complete lack of understanding of the daily lives of many people (and not a mere few). The Paymaster General could also do with a humility check.

Or could it be that she thinks the sun shines out of the Chancellors backside and consequently anything he creates is thereby perfect?

Nice one Paul - I couldn't agree more!

And as Shawn's post shows, she doesn't give a damn about answering MPs questions either.

Next question: what percentage of appeals against tax credit overpayments, that give rise to entitlement rather than recoverability questions, ever make it to the Tribunals Service? I had a client who appeared to have acquired two (completely different) claims at once, though no evidence that she was getting two lots of money, and after six months of pushing and shoving and trying to establish what the hell was going on and formally appealing and finally involving the MP, they ever so magnanimously said they'd write it off and we never did find out what had been going on. And I have no idea at all whether she was actually being overpaid or not. Nice of them to write off an overpayment that quite possibly hadn't happened. I think they find it easier than trying to do a comprehensible (!?) calculation to forward it to TS.

I do agree that Tax Credits are complex and have many problems associated with them. The situation with overpayments is a mess, notifications are often confusing and contradictory and the decision to write off seems to be more influenced by HMRC's backlog than by the merit's of an individual case.

On the other hand I don't think Ms Primorolo is alone in assuming that the radical reform of the system the opposition will, in practice, look remarkably like of scrapping them altogether.

If there are 300,000 disputed overpayments that means that over 95% of tax credit claims have not resulted in a disputed overpayment.

About 6.5 million households benefit from these tax credits which is vastly more than any previous system aimed largely at helping the working poor and the majority of these receive more than the minimum Family Element.

It's very easy to critisise but what is the alternative? Obviously we all want to see better administration but the Government keeps trying to put the system right and that just contributes to the problems and confusion.

Maybe they should scrap the system and do something else but what? They could try genuine tax allowances but the Children's Tax Credit went largely unclaimed. They could increase Universal Benefits like Child Benefit and make it taxable so as not to spend so much money on the better off, but how would that help the working poor without families?

In my borough there are currently well over 1,000 people without families getting WTC. Under the old system there were about 50 people getting Disabled Person's Tax Credit. Which is worse; taking benefit away from nearly a 1,000 people or causing stress and confusion to about 50?

I think you raise some very interesting and cogent points, Chris. Much of my frustration with the TC system arises from the fact that many of the potential problems were flagged up by VCS representatives when we worked with IR (as was) on the design of the new TCs in months and years before introduction.

I really do think that the situation regards the lack of appeal rights for overpayments is indefensible and is one of the key barriers to people claiming TCs, as people feel unconfident that they won't be stung if they, or more importantly HMRC themselves, get things wrong in connection with their TC claims.

And there are many outstanding issues in terms of disability and TCs, particularly the anomoly that is fast-tracking for disabled people, which is actually one of the most tortuous and long winded procedures that we are aware of for establishing entitlement to WTC.

A particular concern we have, that we will be taking up with HMRC, is how the introduction of ESA in October 2008 will be dealt with - the potential for added complexity is enormous, as there will be a completely new system of assessing incapacity for work running under ESA, alongside the 2.6million pre-existing IB claimants who will remain on the 'old' rules for an indeterminate period of time.

But I do have to agree with you that, in many ways, the TC system has managed to have a positive redistributive effect on income that appears to have reached far more people than predecessor benefits. I think there has to be, and this is still taking place, a change in the approach of HMRC as they do not have the same mindset as the DWP in dealing with 'customers' or representatives yet. And I think that criticism is a part of that process, whether they like it or not.

Hi all, just regarding the question:

.... The Paymaster General was asked what proportion of appeals against the overpayment of tax credits had been refused and she has not managed to answer that question yet. It would be helpful to the House if she did so, so we could see how well the system is working.

I thought that it was helpful of me to tell the House that 303,000 overpayments were disputed, 8,600 of which were written off.

Just what was the MP referring to when she/he talked about appeals - and why didn't PG simply say there is no right of appeal in relation to disputing the recovery of an overpayments. Just scratching my head wondering what the questioner was trying to get at. Or is this appeals against the original tc entitlement decision - and if so I wonder why this information is not readily available.

Kevin, you are aware that there is no right of appeal in relation to disputing the recovery of an overpayment. How come we all know that, but TCO, DMU and other HMRC staff still keep telling clients to appeal their overpayments?? I'm sick of telling advisers on the DMU payments helpline to STOP using the word "appeal" as they are misleading clients. And do they accept what I say and correct themselves, no, of course, they insist on arguing that since the client can appeal entitlement they are right to use the work appeal, then I have to advise them that since the case has already been referred to them in DMU, the entitlement decision would have been issued a lot longer than a month ago so the appeal time limit would have been long passed and the way to dispute an overpayment is not to appeal entitlement anyway...........

OK, rant over, but if any HMRC staff are listening, please, please do something about this........

more from the paymaster general in parliament yesterday -

'My hon. Friend also asked about appeal on entitlement, and referred to what the Child Poverty Action Group said to him and to the Sub-Committee: that the Department acted as a gate-keeper to whether appeals on entitlement were passed to the tribunal. He was right in saying that there is an appeal procedure. I confirm that that is slightly different from acting as gate-keeper. It did not do that, but what was happening—he speculated on this—was that someone was given a notification of appeal and the Department then offered the final review on whether a settlement could be made before appeal.

Quite rightly, in my view, the CPAG said that that was not clear enough, because it could be misinterpreted, and that there should be a clear indication of appeal rights on entitlement and so on to the tribunal. If a review is offered before that, it should be made clear that the appeal can still take place subsequently. The text of the letter that will explain that to claimants will be shared with the CPAG to ensure that it is clear to everyone.

On the question of appeals and the difference between the structure in the Department for Work and Pensions and that in HMRC, I said yesterday that I would send the Sub-Committee my view on that, because there seem to be different interpretations. DWP’s policy is to ask for repayment when an overpayment is caused by official error but it is reasonable to expect that the claimant would have been aware of being overpaid. DWP has no statutory test or right to appeal to recovering overpayments caused solely by official error. That rests on common law application.'