HMRC IT failure hits families

The Citizens’
Advice Bureau
(CAB) today slammed
HM Revenue & Customs
for IT blunders with its tax credit system that have left some families relying
on the Salvation Army for food. 

The problems occurred when IT systems overpaid hundreds of thousands of
families, as many as a third of all recipients, by £1.9bn.

The government then sought to claw back the money, but because it calculates
money owed on an annual basis families have been either cut off or faced with
expensive bills.

‘CAB advisers have found it impossible to resolve even simple problems,
because tax credit IT systems have left Helpline advisers unable to provide
accurate information, and because letters have gone unanswered, sometimes for
months,’ said the report.
The findings were based on the 150,000 cases the CAB had to deal with last year.

‘Payments are supposed to be responsive to falls in income or other changes
affecting entitlement, but the system is complex to understand and administer,’
the report continued.

‘Incomprehensible and contradictory award notices have meant that many people
cannot understand their entitlement, or spot errors frequently made on their

Meanwhile a separate report from
Ann Abraham also criticised the tax credit IT system. ‘It is clear
that the Revenue’s assurances were over-optimistic,’ she said.

‘The majority of problems with tax credits seem to originate from the design
of the system itself, which is wholly IT-based, and does not take account of the
needs of customers.

‘A financial system which has an element of financial uncertainty built in
also makes it difficult, or even impossible, for recipients of tax credits to
budget ahead.’

Paymaster General
will make an emergency statement in the Commons this lunchtime on
the matter. She has already committed to writing off some of the debt.

Related reading