Tax Credits

Are you one of the two million families repaying the Government £2 billion because of mistakes on tax credits?

Labour’s tax credit system is rapidly turning into a tax nightmare.

This new system was supposed to help people on low incomes, yet mistakes by the Inland Revenue are leading many families into debt and hardship.

The problem is that Gordon Brown’s scheme is just too complicated and bureaucratic. Neither the computers nor the Inland Revenue can cope.

I’ve helped a number of local families worried by huge demands for repayment: some had even warned the Revenue they thought they were being overpaid, with no effect.

In Kingston and Surbiton alone, of the 7,200 families awarded a Child and Working Tax Credit in 2003/04, over 34% were overpaid. Those 2,100 families now face having to pay back an average of £1,000.

These families – and 2 million like them across the country - are having budgets thrown into chaos.

But what these figures do not show is how many overpayments result from official error and how many the Revenue will write off.

Ministers have been forced to look again at how overpayments are clawed back - an admission they have not been acting responsibly.

The policy of reassessing income at the end of the award is flawed. A return to a system of fixed awards would end this bureaucratic nightmare.