Charity urges urgent reform of tax credits system

The tax credits system needs to be urgently reformed if public confidence in the policy is to be restored, a leading children’s charity said yesterday.

The Child Poverty Action Group makes the comments in an action plan on how to improve tax credits which has been sent to paymaster general Dawn Primarolo.

The plan’s launch coincided with the appearance of David Varney, chief executive of HM Revenue & Customs, before the Treasury sub-committee, where he was expected to be questioned about tax credits.

The plan calls for an amnesty of all tax credit overpayments up to April 2005 when fraud had not been proven and for overpayments to be recovered more fairly so that tax credit awards are not wiped out all together leaving families in extreme hardship.

It goes on to recommend that the revenue stops automatically recovering overpayments and gives claimants a chance to challenge decisions to claim back the money before this takes place.

Advice for claimants is also highlighted as needing improvement and the charity calls for some Revenue & Customs staff to be based in local Jobcentre Plus Offices to achieve this.Kate Green, chief executive of CPAG, said: “The government must address the administrative problems as a matter of urgency so that families no longer have to battle against incomprehensible decisions and impenetrable bureaucracy.”

First Steps to Reform Tax Credits from: www.cpag.org.uk