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Welfare Tax Credits: Overpayments

Volume 462: debated on Wednesday 27 June 2007

To ask the Chancellor of the Exchequer how many people were taken to court for non-payment of tax credit overpayments in (a) April and (b) May; and if he will make a statement. (144552)

To ask the Chancellor of the Exchequer whether it is his policy to categorise tax credit overpayments due to failure to declare a partner as fraud or as error; and if he will make a statement. (144695)

Whether overpayments arising from a failure to disclose a partner are categorised as error or fraud is dependent on the individual circumstances of a case.

To ask the Chancellor of the Exchequer what his estimate is of the cost to date of tax credit overpayments due to failure to declare a partner. (144696)

The estimated cost of error and fraud by claimants failing to declare a partner, in 2003-04, is published in table 6 of the HMRC publication “Child and Working Tax Credit. Error and Fraud Statistics. 2003-04”, which is available on the HMRC website at:

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

To ask the Chancellor of the Exchequer how many tax credit forms TC846 were issued in each month from April 2003 to June 2007. (144697)

To ask the Chancellor of the Exchequer what his latest estimate is of the average cost of handling each tax credit overpayment appeal; and if he will make a statement. (144698)

To ask the Chancellor of the Exchequer how many tax credit overpayment demands were overturned by (a) the Ombudsman and (b) the Adjudicator in each reporting period from 2003-04 to 2007-08; and if he will make a statement. (144699)

For information about the independent adjudicator and the ombudsman, I refer the hon. Members to the answer I gave the hon. Member for Wycombe (Mr. Goodman) on 30 January 2006, Official Report, column 143W. The independent adjudicator subsequently published her 2006 report on 20 June 2006 and the parliamentary ombudsman published her report on 12 July 2006.

To ask the Chancellor of the Exchequer if he will publish the guidelines given to HM Revenue and Customs (HMRC) staff for recovering overpaid tax credits; what powers HMRC staff have to make calls at the claimant's home address; and if he will make a statement. (144700)

HM Revenue and Customs (HMRC) has a standard process for direct recovery of tax credit overpayments, the primary objective being to encourage the claimant to make contact. The process includes printed reminders for payment, at least three attempts at making personal contact by telephone or a visit to the claimant’s home address if telephone contact not possible. And finally a letter warning of legal proceedings is issued before cases are taken to court. The process includes a facility for the Tax Credits Office to withdraw, at any time, any case under dispute.

HMRC staff operate under a general power, without which the Commissioners would be unable to undertake their duty to collect the revenue for which they are responsible, under section 5 Commissioners for Revenue and Customs Act 2005 (which includes tax credits under S5(1)(c).

To ask the Chancellor of the Exchequer what recovery procedure checks are in place in HM Revenue and Customs (HMRC) which must be implemented before HMRC can take to court tax credit claimants with overpayments; and if he will make a statement. (144703)

Instructions to staff on the prime procedural checks, which must be implemented before court action is instigated for recovery of a tax credit overpayment, state that the overpayment must be appropriate for recovery. The procedure includes:

a check to ensure that the case is not in dispute, subject to a time to pay arrangement or a potential hardship case

a check to ensure that the claimant is not in receipt of income support or jobseekers allowance

a check for any special circumstances that suggest the case is not appropriate for recovery action.

a check by a higher grade officer to ensure that the case is suitable for court action and that all the procedures have been carried out.

To ask the Chancellor of the Exchequer (1) how many errors HM Revenue and Customs staff are allowed to make in dealing with a tax credit case before an overpayment is written off; and if he will make a statement; (144705)

(2) whether a tax credit overpayment is deemed recoverable if, due to official error, a tax credit award notice records both zero income and the claimant’s place of work and hours of work; and if he will make a statement.

HMRC’s approach to handling tax credits overpayments is set out in its code of practice 26: “What happens if we have paid you too much tax credit?” available at http://www.hmrc.gov.uk/leaflets/credit.htm

To ask the Chancellor of the Exchequer what targets have been set by HM Revenue and Customs for its staff involved in dealing with tax credit overpayment appeals; and if he will make a statement. (144706)

Tax credits claimants have a right of appeal against decisions about their tax credit entitlement but HM Revenue and Customs (HMRC) code of practice 26 “What happens if we have paid you too much tax credit?” gives the reasons why claimants might be able to dispute an overpayment and how they should do this.

HMRC aims to deal with 80 per cent. of correspondence within 15 working days of receipt and 95 per cent. within 40 working days.

To ask the Chancellor of the Exchequer if he will make a statement on the introduction of reduced rates of recovery from tax credit overpayments. (144708)

I refer the hon. Member to my written statement to the House on 6 December 2006, Official Report, column 15WS and the evidence I gave to the Treasury Select Committee on 14 March 2007 in response to question 20.

To ask the Chancellor of the Exchequer what progress has been made in using a pilot to test the possibility of the adjudicator working with HM Revenue and Customs to provide a fast track independent review for disputed tax credit overpayments; and if he will make a statement. (144745)

HMRC is planning with the adjudicator to provide a fast track independent review for disputed overpayments. A pilot will start in next few months to test arrangements.

To ask the Chancellor of the Exchequer what his latest estimate is of the number of (a) disputed overpayments of tax credits and (b) disputed overpayments of tax credits written-off in each month since February 2007; and if he will make a statement. (144866)

The numbers of disputed overpayments received and the numbers of overpayments written off either fully or partially because of official error since February 2007 were around:

Month 2007

Number of disputes received

Number written off (fully or partially)

February

19,500

500

March

20,000

450

April

14,000

350

May

16,000

400

The figures for overpayments written off do not directly relate to those disputes that were received in the same month. TCO does not separately record whether an overpayment is written off in part or in full.

To ask the Chancellor of the Exchequer for what reasons the number of disputed tax credit payments which were written-off declined between 2005 and 2006; and if he will make a statement. (144867)

I refer the hon. Member to the oral evidence taken before the Treasury Committee on 14 March 2007.

To ask the Chancellor of the Exchequer (1) whether his Department’s estimates of overpaid tax credits in 2003-04 and 2004-05 include amounts paid out due to fraud and error; and if he will make a statement; (144898)

(2) what estimate he has made of the proportion of tax credit overpayments which involved some element of official error in the latest period for which figures are available; and if he will make a statement.

The HMRC statistical publications on overpayment of tax credits in 2003-04, 2004-05 and 2005-06 do not include any claims identified as error (claimant or official) or fraud.

The HMRC publication “Tackling Error and Fraud in the Child and Working Tax Credits” provides an explanation on what information is included in the overpayment and Error and Fraud publications. This document is available on the HMRC website at:

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