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Tax Credits

Volume 451: debated on Wednesday 8 November 2006

To ask the Chancellor of the Exchequer how many tax credit overpayments were remitted between (a) 1 September 2005 to 1 September 2006 and (b) 1 September 2004 to 31 August 2005; what the total value of such remittances was in each period; and what criteria were used in each period in determining eligibility for a remittance. (92972)

For the number of tax credits overpayments remitted on the ground of official error, I refer the hon. Member to the answer I gave the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) on 10 October 2006, Official Report, columns 730-31W.

For the value of tax credits overpayments written off on the ground of official error between June 2004 and March 2006, I refer the hon. Member to the answer I gave the hon. Member for Yeovil (Mr. Laws) on 14 July 2006, Official Report, column 2116W.

The value of overpayments written off on the ground of official error from March 2006 to August 2006 was:

£000

Value of disputed overpayments written off on ground of official error

March 2006

l,659

April 2006

111

May 2006

1,368

June 2006

928

July 2006

986

August 2006

853

The value of overpayments remitted on the ground of hardship is compiled annually to the end of October and shown in the table:

£000

Year to end of October

Amount remitted

2004

0

2005

287

Note:Details for the year to end of October 2006 are not yet available.

This information gives working tax credit (WTC) and child tax credit (CTC) remittance. Figures given on 4 July 2006, Official Report, column 998W, in answer to a question from the hon. Member for Yeovil (Mr. Laws) and on 9 October 2006, Official Report, column 301W, in answer to a similar question from my right hon. Friend the Member for Birkenhead (Mr. Field) provided figures for WTC only.

For details of the criteria applied by HMRC in deciding whether an overpayment should be written off, I refer the hon. Member to the answer I gave the hon. Member for Yeovil (Mr. Laws) on 9 October 2006, Official Report, column 299W.

To ask the Chancellor of the Exchequer whether non-resident parents are liable for repayment of child tax credit overpayments by HM Revenue and Customs. (96288)

Liability for overpayments is set out in Section 28(4) of the Tax Credits Act 2002. HMRC's approach to handling overpayments is set out in their Code of Practice 26, "What happens if we have paid you too much tax credit?"

To ask the Chancellor of the Exchequer what his latest estimate is of the average cost of administration for each (a) tax credit payment and (b) child benefit payment; and if he will make a statement. (96538)

The estimated cost of the payments in 2005-06, the latest period for which details are available, is: tax credits £2.78/payment; child benefit £0.74/payment.

The variation in cost is a reflection of the frequency of contact between the Department and its tax credit and child benefit customers being significantly different. Tax credits are responsive to a household's changing circumstances and require annual renewal, whereas once entitlement to child benefit has been established no further contact is normally needed until a child leaves school.

To ask the Chancellor of the Exchequer how many of the recommendations made by the parliamentary ombudsman's report “Tax Credits: Putting things Right” have been (a) implemented, (b) accepted but not implemented and (c) rejected; and if he will make a statement. (97021)

HMRC have responded positively to the recommendations set out in the ombudsman's report. In respect of recommendation 10, current policy is for overpayments to be written off where there was a mistake by HMRC and it was not reasonable for the claimant to have spotted the error. The Government believe this strikes the right balance between being fair to those claimants who have been paid the incorrect amount and being fair to the taxpayer in general.

To ask the Chancellor of the Exchequer (1) how many technical difficulties within the tax credits system are affecting tax credit awards for 2006-07; and if he will make a statement; (97276)

(2) how many tax credit claims are being adversely affected by IT problems within his Department’s responsibilities; and if he will make a statement.

I refer the hon. Member to the answers I gave him on 4 September 2006, Official Report, column 2004W, and on 26 October 2006, Official Report, column 2028W.

To ask the Chancellor of the Exchequer (1) how many tax credit pre-payment checks have been made in each year since 2003-04; (97652)

(2) in how many cases of false or fraudulent tax credit claims HM Revenue and Customs intervened in (a) 2003-04, (b) 2004-05, (c) 2005-06 and (d) 2006-07 (from 1 April 2006 to 30 September 2006).

Information on tax credit compliance interventions for 2006-07 will be available at the end of the year. Information on compliance interventions for earlier years can be found in the Comptroller and Auditor General's Standard Reports on HMRC’s Accounts.

To ask the Chancellor of the Exchequer what tax credit verification checks are in operation. (97660)

Each claim for tax credits is subject to a wide range of checks. It would be inappropriate to disclose a complete list of verification checks relating to tax credits as to do so may provide assistance to those attempting to defraud the system.

To ask the Chancellor of the Exchequer how many potential tax credit fraud cases have been identified by HM Revenue and Customs’ pre-payment checks for each week from 27 March 2005 to October 2006; and if he will make a statement. (97667)

I refer the hon. Member to HM Revenue and Customs 2005-06 Accounts: The Comptroller and Auditor General’s Standard Report, available at http://www.nao.org.uk/.

To ask the Chancellor of the Exchequer what the (a) membership and (b) purpose is of the HM Revenue and Customs Organised Tax Credit Fraud Strategy Board; and if he will make a statement. (97677)

The HM Revenue and Customs Organised Fraud Strategy Board is a governance body with membership drawn from relevant directorates to oversee compliance and criminal investigations.

To ask the Chancellor of the Exchequer how many prosecutions for systematic tax credit fraud were completed between June and October; how many convictions resulted; and what confiscation orders were put in place. (97678)

To ask the Chancellor of the Exchequer how many people claimed (a) working tax credit and (b) child tax credit in Chorley in 2005-06. (98042)

I refer my hon. Friend to the answer given to my hon. Friend the Member for Portsmouth, North (Sarah McCarthy-Fry) on 26 October 2006, Official Report, columns 2028-29W.

To ask the Chancellor of the Exchequer what proportion of childcare tax credit claims checked by HM Revenue and Customs compliance staff in (a) 2003-04, (b) 2004-05 and (c) 2005-06 were incorrect due to fraud or error; and if he will make a statement. (98100)

I refer the hon. Member to the publication “Tackling error and fraud in the Child and Working Tax Credits” available on the HMRC website at www.hmrc.gov.uk/news/index.htm.

To ask the Chancellor of the Exchequer what the estimated cost is of the increase in the tax credits income disregard from £2,500 to £25,000 in each financial year between 2006-07 and 2010-11; and if he will make a statement. (98286)

[holding answer 1 November 2006]: The increase in the tax credits income disregard is part of a package of measures announced in the 2005 Pre-Budget Report. The Government have always been more confident about the overall cost of the PBR package which is based on the total level of overpayments. The estimates were based on data from the first year of the system and provisional information from the second year.

The Exchequer effect of the changes to the tax credit system depends crucially on the source of overpayments. At that stage there was only limited information available on the sources of overpayments as HMRC only had complete data on 2003-04 overpayments, which were not representative of the system in steady state. This difficulty in accessing good quality data in the past made costing the individual elements of the package difficult.

However following publication of the 2004-05 overpayment statistics in May 2006, HMRC now has two years of overpayment statistics to inform this costing. And crucially, unlike in 2003-04, awards in 2004-05 were based on the previous year’s income making them much more representative of future years awards. In addition the first stage of the finalisation process for 2005-06 was completed in August 2006, adding to this body of knowledge. This additional information has not led the Government to change the costing of the disregard—or the package as a whole—however it has allowed it to feel more confident in the costing of the individual elements of the package.

There are still some uncertainties surrounding the costing. In particular it remains the case that while the overall cost of the package is not affected by the order with which the changes are modelled, these interactions mean that the costs of the individual elements of the package are affected by the assumed order.

Subject to these uncertainties, the costing of the £25,000 disregard over the period 2006-07 to 2010-11 is provided as follows:

Exchequer effect (£ million)

Income disregard of £25,000

2006-07

-50

2007-08

-100

2008-09

-150

2009-10

-250

2000-11

-300

One needs to carefully distinguish between the change in claimants’ entitlement from the change in the disregard and the cost to the Exchequer. The cost of the disregard is not the change in entitlement, but the forgone recovery of overpayments. The basic principle is that when money is paid out to tax credit claimants, it scores as a cost to the Exchequer. On the other hand, when any overpaid tax credits are recovered, there is a yield. The higher disregard does not necessarily affect the amount of money paid out to claimants in any one year. But by reducing the amount of overpayments, the higher disregard will mean there is less money to be recovered in future years. Hence the profile of costs shown above.

To ask the Chancellor of the Exchequer what plans he has to change the tax credit treatment of couples in comparison with that of lone parents. (98848)

The tax credits scheme enables the Government to meet the objectives of supporting families, making work pay and tackling child poverty. All aspects of the tax credits scheme are kept under review to achieve these aims.

To ask the Chancellor of the Exchequer whether there is any evidence that HM Revenue and Customs staff have been involved in tax credit fraud; and if he will make a statement. (98850)

HMRC has robust procedures in place to identify abuse of the tax credits system, and all other types of fraud. Prosecutions will be pursued against the very small number of HMRC’s 98,000 staff who abuse their position of trust. Since 2003, there have been 12 cases of tax credit fraud involving HMRC employees.

To ask the Chancellor of the Exchequer what plans he has further to simplify tax credit award notices. (98851)

HMRC has taken a number of steps to ensure its communications are more claimant friendly and forms are easier to complete. This has included revising the tax credits award notice from April 2006 to give the claimant more information about entitlement, overpayments and recovery arrangements and improving the guidance note sent to claimants with their award notices.

Going forward, the finalisation/renewal notice claimants receive at the end of the year will include a “playback” of the information held by HMRC about their income and circumstances for the previous year. Building on these important steps, HMRC will continue to monitor the claimant experience and review the form based on feedback from claimants and those who represent them.

To ask the Chancellor of the Exchequer what plans he has to introduce a statutory test for the recovery of tax credit overpayments with a right of appeal to an independent tribunal. (98852)

To ask the Chancellor of the Exchequer pursuant to the answers of 25 October 2006, Official Report, column 1950W and 29 November 2005, Official Report, column 341W, on tax credit overpayments, whether the April 2003 tax credit easement was due to (a) an error by HM Revenue and Customs and (b) an operational decision taken by HM Revenue and Customs; and if he will make a statement. (98928)

To ask the Chancellor of the Exchequer how many tax credit applications by migrant workers were (a) received, (b) approved, (c) rejected and (d) terminated in each quarter since 2003. (100051)

To ask the Chancellor of the Exchequer how many requests have been received from (a) families and (b) individuals in (i) the UK and (ii) Wansbeck constituency for the transcripts of their telephone conversations with staff at tax credit offices in the last 12 months; and what percentage of those requests have been refused. (100052)

Individuals can make subject access requests for recordings of calls made to the tax credits helpline, the Tax Credit Office’s director’s hotline and the MP hotline and those requests are dealt with in accordance with the Data Protection Act 1998.

Between 1 October 2005 and 30 September 2006 HM Revenue and Customs received around 2,600 subject access requests for recordings of such calls from individuals in the UK. Information at constituency level is not available.

To ask the Chancellor of the Exchequer what percentage of families in (a) the UK and (b) Wansbeck constituency in receipt of working tax credit have disputed alleged overpayments with HM Revenue and Customs. (100054)

To ask the Chancellor of the Exchequer pursuant to the letter of 15 June 2006 from the hon. Member for Denton and Redditch, when he expects HM Revenue and Customs to pay back the outstanding £709.88 owed to Mrs. Julie Bowers, a constituent of the hon. Member, in respect of her tax credit case. (100147)

HM Revenue and Customs is statutorily debarred from disclosing information relating to the tax credits affairs of individuals. I have asked the Tax Credit Office to write to my hon. Friend about his constituent’s case.

To ask the Chancellor of the Exchequer if he will estimate the number of tax credit overpayments in 2004-05; how many such overpayments have been accepted as the fault of HM Revenue and Customs; and how many such overpayments will be written off. (100207)

For published information on the number of tax credits overpayments in 2004-05, I refer the hon. Member to

www.hmrc.gov.uk/stats/personal-tax-credits/menu.htm.

Information is not available on how many 2004-05 overpayments were due to official error or how many of those will be written off.

To ask the Chancellor of the Exchequer if he will estimate the number of recipients of tax credits whose household income was (a) up to £10,000, (b) between £10,000 and £20,000, (c) between £20,001 and £30,000, (d) between £30,001 and £40,000, (e) between £40,001 and £50,000 (f) between £50,001 and £60,000 and (g) more than £60,000 in the most recent year for which figures are available. (100247)

The latest available average number of in-work benefiting families in each band of income is given in Table 2.9 in “Child and Working Tax Credits Statistics. Finalised annual awards 2004-05.” This publication can be found on the HMRC website at:

http://www.hmrc.gov.uk/stats/personal-tax-credits/menu.htm

There were on average around 3,000 benefiting families in 2004-05 with household income of more than £60,000.