An Edinburgh mother wrongly awarded more than £4,500 in tax credits has been allowed to keep the money after the Treasury admitted its mistake.
Despite providing correct information to HMRC officials, mother-of-two Pauline Duff was incorrectly allocated the money and then received demands to pay it back.
Her local MP John Barrett took his constituent's case to paymaster general Dawn Primarolo who yesterday ruled that the repayment demands would be dropped because Duff had provided the authorities with the right information.
Primarolo said she had "every sympathy" for the woman.
Ms Duff, a 39-year old classroom assistant, first notified officials in September 2003 that her circumstances had changed because she had moved in with her partner. However, in 2005, HMRC informed her she had been overpaid £3,000 in tax credits because she had failed to inform them of her new living arrangements.
Duff repeatedly informed officials of their mistake but they continued to pay her with the amount owed eventually reaching £4,500.
"The system is so complex it leaves even the experts confused."
John Barrett MP
According to John Barrett, £10 million in tax credits were overpaid to families in Edinburgh alone during 2003-04.
"I have lost count of the number of cases in my constituency surgeries where families have been forced through a bureaucratic nightmare and left struggling to maintain a normal life because of the badly flawed tax credit system," he said.
"The system is so complex it leaves even the experts confused. Far too often there is no explanation given by the Revenue for an overpayment and the chances of getting through to someone on their helpline has been next to impossible."