‘Tax credit system must be reformed’

Child poverty campaigners have called for reforms to the tax credit system after MPs said the recovery of overpayments was “causing hardship to many families”.

The Child Poverty Action Group said families should be given a statutory right to appeal against decisions to claw back overpayments, after the Commons’ public accounts committee blasted HM Revenue and Customs over its management of tax credits, in a report released this week.

The committee said the department had overpaid £2.2bn in tax credits to 1.9 million families in 2003-4, and there would be a similar level of overpayment in 2004-5.

This is because awards are based on incomes from the previous year, and people often receive more than they are entitled to because incomes tend to increase.

The CPAG also said tax credit claimants should be able to receive face-to-face advice.