EXECUTIVE SUMMARY

  1.  As a representative of Tax Credits overpayments victims I am requesting that the Select Committee seek information from HMRC regarding Tax Credits overpayments for 2006-07, the number of overpayment disputes received or processed during 2006-07, the end-to-end costs of processing overpayment disputes in 2006-07, the percentage of overpayment cases written off on the grounds of financial hardship in 2006-07, the number and percentage of overpayment cases successfully pursued via the Courts in 2006-07, also the number of overpayments written off as HMRC error, and at what stage they were written off.

  2.  With regards to HMRC administration, I am seeking an update on the implementation of the recommendations in the Parliamentary Ombudsman's report Putting Things Right June 2005 HC 124.

  3.  This information is relevant both to the tax payer and to MPs and others representing, and campaigning on behalf of, victims of Tax Credits mistakes and overpayments.

BRIEF INTRODUCTION

  4.  My name is Lisa Weatherley and I am volunteering on behalf of the organisation "Tax Credit Casualties", who represent and assist members of the public affected by Working Tax Credit and Child Tax Credit overpayments. There is information about our organisation at www.taxcreditoverpayment.pwp.blueyonder.co.uk

  5.  In addition, my partner is subject to a £5,000 Tax Credits overpayment demand from HMRC which we are currently in the process of disputing.

  6.  In brief, Tax Credit Casualties are calling for all non-fraudulent Tax Credits overpayments from April 2003 onwards to be written off, and for a reform of the Tax Credits scheme to better reflect the needs and circumstances of claimants.

  7.  Tax Credit Casualties are very interested in HMRC expenditure and administration in relation to Working Tax Credits and Child Tax Credits, and the recovery of overpayments of these, and I am hoping that we can contribute to, and learn from, the Select Committee meeting above.

FACTUAL INFORMATION

  8.  Tax Credit Casualties request information from HMRC on the number and monetary value of Working Tax Credits and Child Tax Credits overpayments for 2006-07.

  9.  We request information on HMRC's expenditure for 2006-07 in relation to Tax Credits overpayments (for example the identification, notification, processing and collection of overpayments, helpline costs, legal costs, and writing off overpayments due to HMRC error and fraud).

  10.  We request information on HMRC and the Treasury's expenditure for 2006-07 in relation to Tax Credit overpayment disputes—from the point at which the claimant first disputes the overpayment to the point where all dispute processes are exhausted ie including the Adjudicator, Parliamentary Ombudsman and the Courts. This would include the costs of the overpayments and complaints staff at Tax Credit Offices etc.

  11.  We request information on the number, and percentage this represents, of Tax Credits overpayment cases written off by HMRC due to the claimants financial hardship.

  12.  We request information from HMRC regarding the number of Tax Credits overpayments cases taken to the courts in 2006-07, the number or percentage of these cases that were found in HMRC's favour, and the number or percentage of these cases that were found in the claimant's favour.

  13.  We are very concerned by the large number of Tax Credit overpayment victims being pursued by HMRC through the courts. We have evidence, and are also very concerned that Tax Credit claimants are being taken to court before they have been able to exhaust the appeals process. Furthermore, Tax Credit Casualties have evidence and are deeply concerned that, once in court, HMRC's Certificate of Debt overrides the claimants' ability to defend themselves and that Judges are claiming that they cannot over-rule such a Certificate.

  14.  It is deeply worrying that Tax Credits overpayments are resulting in thousands of British people having County Court Judgements (CCJs) against them, and the implications this has for their ability to access financial services such as mortgages.

  15.  Lastly, we request an update on HMRC's implementation of the recommendations in the Parliamentary Ombudsman's report Putting Things Right June 2005 HC 124.

RECOMMENDATIONS

  16.  Tax Credit Casualties believe that tax payers' money, and HMRC's staff time and resources would be much better spent writing off overpayments and overhauling the Tax Credits system to minimise or eliminate overpayments, rather than spending our taxes uneconomically chasing overpayments and disputed overpayments, and maintaining an inherently unfair and unworkable system. We have also personally all been victims of HMRC's mistakes, delays, failures, lack of accountability, partiality and heavyhandedness. We therefore make the following recommendations:

  17.  Tax Credit Casualties recommend that HMRC, as a matter of urgency, implements recommendation 10 from the Parliamentary Ombudsman's report Putting Things Right June 2005 and writes off in full all non-fraudulent excess and overpayments of Tax Credits 2003-05.

  18.  Tax Credit Casualties recommend that HMRC implements, as soon as possible, all recommendations from the Parliamentary Ombudsman's reports on Tax Credits Putting Things Right June 2005 and Getting It Wrong October 2007.

  19.  Tax Credit Casualties recommend that HRMC immediately scrap the "reasonableness" component of CoP26, as HMRC have proven themselves to be incapable of administrating this in a fair, reasonable and impartial manner, and instead use an independent body to assess the source, and writing off, of Tax Credit overpayments.

  20.  Tax Credit Casualties recommend that HMRC invite Tax Credit Casualties representatives to attend the Tax Credits Consultations Group to help reform Tax Credits, in a transparent and accountable way, into a system that best reflects the needs and circumstances of claimants.

  21.  Tax Credit Casualties also seeks the support of the Sub-Committee in seeking an urgent meeting between Tax Credit Casualties and Jane Kennedy, Financial Secretary to the Treasury, to discuss, address and progress issues of Tax Credits administration and overpayment.

November 2007