An influential government spending watchdog questioned the
design of the tax credit system today labelling its operation as
unsatisfactory, writes Amy Taylor.
The Public Accounts Committee also revealed that almost one
million taxpayers’ records were incorrectly deleted between
1997 to 2000 by routine housekeeping software.
The incorrect deletion resulted in 364, 000 taxpayers who cannot
be identified not receiving £82 million to which they are
entitled and 22, 000 others not paying £5 million of tax that
The committee, which makes the comments in a new report, goes on
to state that the scale of tax credit over payments was much higher
than the level envisaged when the system was designed.
It cites Department for Work and Pensions figures from June 2005
showing that a third of tax credit claimants (1.8 million) had been
overpaid in 2003-4.
The report concluded that the DWP was unable to show whether the
number of tax credit overpayments due to fraud and claimant error
had halved as it predicted in December 2003.
Inland Revenue: Tax Credits and Deleted Tax Cases from: www.parliament.uk