Court action on Tax Credits causing hardship

The administration of tax credits remains the biggest single policy issue for Citizens Advice in Northern Ireland. The House of Commons Treasury Sub-Committee recently published a report on tax credits to which Citizens Advice Northern Ireland submitted eight pages of substantial evidence based on case studies from across Northern Ireland.

The main issues with tax credits for Citizens Advice are:

• the overpayment of tax credits,
• lack of local contact within Her Majesty’s Revenue & Custom (HMRC) and
• a lack of internal communication between the different HMRC departments leading to inaccurate information provision.

Last week, the Chancellor Alistair Darling, informed the House of Commons that the soaring costs of the tax credits system are "unacceptable" and that "vulnerable families who have been overpaid would face a future of uncertain hardship repaying debt to the Government".

The Chief Executive of Citizens Advice Derek Alcorn said

Recovery through the courts

Citizens Advice also wishes to highlight the fact that HMRC is now pursuing many vulnerable people through the courts for overpayments. In fact, one person is now being pursued in relation to overpayments through the courts without ever having received notification of overpayments previously. This will inevitably leave many of the most vulnerable in society facing severe financial hardship.

Recommendations

Citizens Advice made several recommendations to the Treasury-Sub Committee including:

• the reinstatement of local customer service contacts to provide a caseworker type approach to solving problems, especially in the case of a complex issue
• that HMRC should issue and award service delivery contracts to the voluntary advice sector for face-to-face advice to the public on tax credits.

Cases seen by Citizens Advice Bureaux

Banbridge

A client had an overpayment of £3,409 despite continually informing HMRC of the correct details and the Tax Credits helpline assisting with applications over two consecutive years.

Bangor

A client received an overpayment of £1,200 which was required to be repaid in two months. The reduction of the award has meant that she had to give up work to look after her children. The client has recently been widowed and has three young children.

Cookstown

A client’s household income was input wrongly onto the computer system which caused an overpayment which accrued over 2 years despite all the information being correctly provided on the renewal form. The client felt that HMRC staff were very abrupt and quite rude in informing them that they would have to pay back £6,000 over 10 years.

Magherafelt

A client discovered her tax credit payments had stopped and when she contacted HMRC they said that the computer had lost hundreds of claimants’ bank details and there was nothing they could do about this. They were unable to confirm when payments would be re-instated.

Belfast

A client disputed an overpayment in March and has heard no word despite an acknowledgement from HMRC in July. The client cannot get through to the Tax Credits Helpline and the CAB adviser cannot get through to customer services. In the meantime £75 per month is being taken from the client’s award.

A client with two children came to CAB with two letters (dated the same day) from HMRC containing details about her tax credit award. The letters showed contradictory information – one letter showed tax credit payments of £3,389.39 and the other showed payments of £3,897.41. Child tax Credit payments are shown as £73.71 in one letter and £22.76 in the other. This situation is causing severe financial hardship to the client and his wife as their only sources of income are Incapacity Benefit £93.30 per week and Child Benefit of £28.40 per week.