Watchdog MPs have questioned the way the tax credits system was
set up and criticised the way it works.
The Public Accounts Committee also disclosed that the records of
nearly one million taxpayers had been deleted from 1997 to 2000 by
routine housekeeping software at the Inland Revenue.
These deletions have left 364,000 unidentifiable people owed
£82m in repayments and 22,000 others with unpaid tax bills
The committee’s report says the scale of overpayments recovered
from claimants was much higher than was expected when the tax
credit system was created.
Committee chair Edward Leigh said vulnerable people were
unfairly being put in difficult situations by the system and
questioned whether it should be redesigned.
Government figures published in June 2005 show that one-third of
claimants – 1.8 million – were overpaid in 2003-4, the first year
the system operated.
The report concludes that the government was unable to show
whether overpayments caused by fraud and claimant error had halved,
as it predicted they would be in December 2003.
Inland Revenue: Tax Credits and Deleted Cases from www.parliament.uk