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Welfare Tax Credits: Overpayments

Volume 476: debated on Tuesday 20 May 2008

To ask the Chancellor of the Exchequer how many people receiving tax credits were involved in disputes relating to overpayments of benefit in each year since their inception; and how many of these cases were resolved (a) in favour and (b) not in favour of the claimant. (202703)

In 2007-08, around 185,000 households disputed an overpayment and HM Revenue and Customs wrote off tax credits overpayments in part or in full for around 6,000 households. Information on the number of households disputing an overpayment is not available before August 2006 but for information relating to the number of disputes received and cases written off for 2004-05, 2005-06 and 2006-07, I refer the hon. Member to the answer I gave him on 17 March 2008, Official Report, columns 901-02W.

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

To ask the Chancellor of the Exchequer what the Government's policy is on recovering tax credit overpayments when the individual has no means to repay the debt. (205999)

When seeking to recover any of the debts for which it is responsible, HM Revenue and Customs (HMRC) has a duty to strike a balance between a customer's ability to pay and its responsibility to recover monies properly owing to the Exchequer.

HMRC's policy on the recovery of 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:

This makes it clear that HMRC will take into account a customer's ability to pay to ensure that vulnerable customers do not experience financial hardship.

Where immediate, full payment is likely to cause the customer financial hardship, HMRC will normally reach an agreement to recover the debt over a longer period, usually 12 months. Where it is clear that a customer will still not be able to repay through such a staged arrangement, because they have little disposable income or assets, HMRC will normally suspend recovery but review the customer's circumstances at a later date to see if it would be possible to restart recovery because their financial circumstances have improved. Where it seems that a customer's financial circumstances are unlikely to change, for example because they are on long-term benefit or are seriously ill, HMRC will remit the debt.