Tax credit bungle due to HMRC errors

HM Revenue & Customs is preparing to write off £2.8bn as a result of bungling of tax credit payments.

More than 1.5m people have been told they have been overpaid tax credits due to their own error, that they have to pay this back and that they do not have a right to appeal.

But the shocking claims from HMRC have been challenged by several victims, who proved that HMRC was at fault after using evidence from their own case files as well as information obtained under data protection laws.

Tax credit recipients obtained confidential tapes and internal documents to prove bullying and bungling by staff responsible for the tax-credit scheme.

Officials' errors that were uncovered indicated offices that were in disarray, with random errors inserted by computers into claimants files, the Sunday Times reported.

Officials also misled claimants into believing they had no right to appeal.

The evidence uncovered showed:

* HMRC computers routinely deleted claimants' salaries, thus triggering overpayments. A claimant who had tax-credit debts was told: 'The computer zeroed your wife's salary. It's a common fault.'

* Duplicate rogue files caused errors and sent out multiple payments. One claimant was sent 10 letters in one day - but was still assured there were no payment mistakes. He was also threatened with legal action because of the overpayments.

* Letters were sent to the victims claiming they had 'no right of appeal' when they were pursued for overpayments caused by official error. A woman with two children said she had taken out a £7,500 loan to repay the tax credits after receiving one of the letters.

Public accounts committee Tory MP, Richard Bacon, said: 'This is unbelievable. It shows no matter how many times claimants gave accurate information, officials still managed to screw it up.'

Further reading:

Bullying tax officials lose £2.8 billion