Overpaid tax credits will not be written off

Paymaster general Dawn Primarolo has made it clear in a letter to
parliamentary ombudsman Ann Abrahams that the Treasury will pursue virtually all
over-payments unless the claimant can prove they could not reasonably have been
expected to spot the error.

Almost a third of the 5.4 million means-tested allowances made in 2003-2004
contained clerical errors and the government has vowed to reclaim the £1.9bn
overpaid to 1.8 million families.

Abrahams identified the widespread overpayments in a report into the tax
credit system in June at the same time as a report from Citizens Advice found
that many of the overpaid families were being pushed into poverty when asked to
repay.

Prime minister Tony Blair apologised in parliament for the government’s
mismanagement of the tax credit system and chancellor Gordon Brown has said in
cases where HMRC is to blame for a tax credit overpayment debts are likely to be
written off.

However, in Primarolo’s response to Abrahams’ report it was made clear that
tax credit payments would only be written if the HMRC had made an error
and ‘it was not reasonable for the claimant to have spotted the error’.