July 12, 2006

Tax credits

The full official extent of the problems with the tax credits system is now in the public domain. £1.17bn has been paid in error, twice earlier estimates. The tax credits programme only deals with about £14 billion so when the numbers like these start popping up you really have to question it's design:
According to the National Audit Office report, £1.17bn was given to claimants in payments to which they were not entitled, £70m through fraud and £1.1b through error. Mistakes also resulted in the underpayment of £230m to claimants.
That largest number, the overpayments, the revenue will attempt to claim back later. This means that families that cannot afford it suddenly get landed with large bills, unsurprisingly many cannot pay
Revenue and Customs wrote off £397m of the £1.8bn it overpaid in 2004-5, and has designated another £409m as "doubtful debts". The figures for 2005-6 are expected to be similar.


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