TaxAdministrationTax credits costs rise tenfold

Tax credits costs rise tenfold

The IT system behind tax credits comes under fire once again as Treasury reveals huge rising costs

The cost of administering the tax credit system has risen tenfold from £36.1m
to a staggering £403m in four years, Treasury figures have revealed.

The huge rise in costs was disclosed in parliamentary answers to questions
posed by Liberal Democrat David Laws, and also showed that 65.5 million award
notices have been issued in two years despite only six million households
receiving tax credits.

The IT system behind the tax credits has repeatedly come under fire for
problems with its payments. Last month Gordon Brown said he wanted to ensure the
IT system ‘works better’ and that tax credit forms were ‘clearer’.

Shadow chancellor George Osborne said: ‘Gordon Brown needs to acknowledge
whether the ongoing problems are a result of his obsession with fiddling and
complexity, or gross failure of his ministers and department to administer the
payments effectively.’

In June this year Accountancy Age reported that the Revenue is
currently seeking about £100m in compensation from its former IT supplier, EDS
for its handling of the child and working tax credits IT system.

An EDS spokesman told Accountancy Age that discussions with the
Revenue were ‘ongoing’.

Related Articles

New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2w Emma Rawson, ATT Technical Officer
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

3w Austin Clark, Reporter
Are you ready for the Trusts Registration Service?

Administration Are you ready for the Trusts Registration Service?

1m Helen Thornley, ATT Technical Officer
European Commission close to anti-tax avoidance package

Administration European Commission close to anti-tax avoidance package

1y Fraser Simpson, Reporter
‘Significant recovery’ for HMRC customer service, claims boss Thompson

Administration ‘Significant recovery’ for HMRC customer service, claims boss Thompson

1y Fraser Simpson, Reporter
Advisers bullish despite Brexit concerns

Accounting Standards Advisers bullish despite Brexit concerns

1y Fraser Simpson, Reporter
Brexit: Five questions accountants should be asking

Accounting Firms Brexit: Five questions accountants should be asking

1y Fraser Simpson, Reporter
UK votes to leave EU – accountancy profession reacts

Accounting Firms UK votes to leave EU – accountancy profession reacts

1y Fraser Simpson, Reporter