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£51m of tax credits overpayments written off

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7th Jun 2005
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HM Revenue and Customs has written off overpaid tax credits of £51m, the paymaster general said yesterday.

Dawn Primarolo revealed that 125,000 disputed overpayment cases were awaiting a decision at the end of April 2005, and the administrative cost of dealing with disputed overpayments in the two years to April 2005 exceeded £8m.

In a Commons written answer she added that in June 2004, HM Revenue and Customs set up a team to deal with disputed overpayments.

"At that time, there was the equivalent of around 105 full time staff working on the team. At 30 April 2005, this figure had increased to around 495," she said.

Primarolo said in response to further questions: "Overpayments to a value of £51m have been written off since tax credits were introduced.

"Of this around £37m was written off following the identification of a software error that affected some 455,000 households in April and May 2003. The background to this is explained in the report of the Comptroller and Auditor General 2003/04, which can be found in the [board's annual report].

"The remaining £14m had been written off by the Tax Credit Office at 20 May 2005, following consideration of claims for official error in accordance with the Department's Code of Practice 26 ['What happens if we have paid you too much tax credit?']

"The estimated administrative cost of dealing with disputed overpayments was around £0.9m in 2003/04 and around £7.6m in 2004/05."

She added that statistics on overpayments in 2003/04, including information on their total value, appear in 'Child and Working Tax Credit Annual statistics 2003/04 payments' and can be found on the [HM Revenue and Customs website].

The latest figures provided by HMRC show that nearly half of the 5.7m awards made in 2003/04 had to be adjusted. Overpayments arose in 1.9m cases, giving rise to excessive payments of £1.9bn.

[Commons Hansard 6 Jun 2005: Column 297W]

Andrew Goodall
Editor, TaxZone

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