The IR Employers Bulletin issue 19 (Feb 2005) has just dropped onto my desk. Page 11 is about Tax Credits, and has a large picture of a smiling, happy family with 3 kids, all running across the beach. I know I should be able to resolve this analogy, but for some reason I can't.

Also on page 11, the IR confirms to employers that in 2005/2006 they do not intend to recover overpayments via the PAYE code (in cases where there is insufficient ongoing tax credits). They say they "may" use this option in future years. I think s29 of the TCA 2002 allows them to attack the PAYE code.

This, of course, is good news. However, it seems to becoming clear that the combined effect of Addional Payments (on "in year" OPs), and the recovery rate etc on actual OPs means that some claimants will be facing recovery of tax credit debts over quite long periods of time. If this is coupled with the liklihood of future OPs developing and being recovered, the short to long term future will be bleak for some of our clients.

Steve