TaxPersonal TaxTax credits fiasco continues into second year

Tax credits fiasco continues into second year

Level of overpayments to hard-up families similar to first year of scheme, says new report

The tax credits fiasco, which saw the government clawing back overpayments to
hundreds of thousands of families, has continued into the second year of the
scheme.

HM Revenue & Customs attempted to recover about £2.2bn from needy
families during 2004-2005, according to the cross-party public accounts
committee.

Conservative MP Edward Leigh, chairman of the committee, said it was
‘disgraceful’ that this level of overpayments should happen two years in
succession.

The committee report showed that HMRC paid out £15.8bn in tax credits to six
million families during 2004-2005. The department estimated that overpayment
levels would be similar to those of the previous year, when 1.9 million families
received a total of £2.2bn in overpayments.

‘This is a deplorable situation for the hundreds of thousands of vulnerable
families who have to find money for repayments,’ said Leigh. ‘HM Revenue &
Customs is struggling to extricate itself from this morass, but about £1bn of
debt from the first two years of the scheme will probably never be recouped.’

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