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The Real Cost Of HMRC Blunders

Paula4th May 2010

Read the article, by Tanya O’Rourke, at the Bradford  Telegraph & Argus

I have been working with Tax Credit Casualties for 5 years and in that time have heard many, many examples of how the system is failing hard working claimants, but this week I have heard a claimant’s story to top them all!

Lisa-Marie Holmes is a young, single mum with a 2 year old little boy. Tax Credits were established to help individuals such as Lisa-Marie Holmes – to make work affordable for those whose incomes would be too low to come off benefits, but it has back-fired for Lisa-Marie.

In May 2009, she was offered an apprenticeship opportunity at her local council through ‘Skills4Work’  (really, you’d think local government and a government agency would be aware of the problem that Lisa-Marie was going to encounter and would have talked to her about money and returning to employment).

Lisa-Marie spent a year working and gaining the skills she would need to achieve a Level 2 NVQ in Admin; she worked 37 hours per week for the grand sum of £2.95 per hour but Tax Credits topped up her income and helped with childcare costs so that she could work and learn and improve her chances for future employment.

Lisa-Marie had done all she should; talked to HMRC about her hours and income and had made it clear that she would be on an apprenticeship. Her childminder also contacted HMRC to ask if Tax Credits would cover childcare payments for a parent on an apprenticeship and was told ‘yes’.  Ms Holmes was told ‘yes’, too.

Until she contacted HMRC regarding her annual renewal.

She was then told that an apprenticeship isn’t classed as work because she has no contract of employment and she is paid a training allowance rather than a wage, which apparently is demonstrated by the amount being below the minimum wage.

Hmm, shouldn’t HMRC have spotted this last year?  HMRC then advised her that she wasn’t entitled to the Tax Credit payments she received last year, approximately £11k, and these would be recovered.

Ms Holmes has had to stop her apprenticeship because HMRC won’t pay for childcare and she cannot afford this on approximately £100 per week.

This is a waste on so many levels: Lisa-Marie only needed to do 5 or 6 more months to gain her NVQ, the council and ‘Skills4Work’ have both put time and resources into her training and development, and Lisa-Marie herself  has now lost an opportunity to gains skills and qualifications to improve her situation in the longer term.

I have looked at the guidance HMRC produce at http://www.hmrc.gov.uk/taxcredits/start/who-qualifies/how-work-qualifies.htm#3 and even for someone used to wading through HMRC’s quagmire of words it is not clear whether an apprenticeship is or isn’t work – it could be both.  Under what counts as work HMRC say:

Working Tax Credit is based on the hours you work and get paid for, or expect to be paid for, either as an employee or a self-employed person. Unpaid work doesn’t count as work when claiming tax credits. Check if your work can help you qualify for Working Tax Credit.

If you have children, you need to be aged 16 or over and do paid work of at least 16 hours a week to qualify.

Presumably the way to check if you qualify for Tax Credits is to phone up and ask, which is exactly what Lisa-Marie did.

Under what doesn’t count as work HMRC say:

You work in a scheme where you get a training allowance, rather than pay – unless the allowance is taxable.

HMRC have contacted Lisa-Marie this week (funnily enough after a journalist wrote an article about her case) to say that the money may not be recovered as she may have been entitled to it after all.  I’m sure Lisa-Marie will feel as though a weight has been lifted from her shoulders to not have to repay £11k, but any joy she may feel at that news will be tempered by the fact that she has still lost her apprenticeship.  If she was entitled to the money, Lisa-Marie has lost the apprenticeship opportunity for nothing.

Either way HMRC have, without any doubt, had a terrible effect on Lisa-Marie’s life.

Tax Credits were set up to help those on low incomes, address child poverty, and help those who are out of work to return to work.  In this case, HMRC have failed on all 3 ambitions.

The system set up to help her work, and HMRC incompetence, has just cost her a job.

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There are 3 comments about “The Real Cost Of HMRC Blunders”:

  1. Comment by Alison at 7:01 am on 6th May 2010

    All sanctioned by Brown and New Labour’s successive Paymaster General/Financial Secretaries to the Treasury (and Chancellor).

    Forget “Bohemian Rhapsody” – here’s a Tax Credit one:

    Tax Credit Rhapsody

    Is this Tax Credits
    In its insanity?
    Clawing back payments,
    No escape from brutality?
    Open your eyes
    To Tax Credit lies and see:
    It’s just a poor ploy,
    Brown has no sympathy.
    To him it’s easy come, easy kill –
    Pay too high, send the bill.
    “Money with your name on” ?
    Power on a platter to Brown
    To Brown.

    Gordon just robbed the poor,
    Put a horse head in our beds,
    Issued threats, laughed as we bled.
    Mama, can you feed your son
    When Brown has stolen everything away?
    Mama, ooo,
    Overpayments make us cry,
    They bring us bills and cause us fear and sorrow.
    Carry on, carry on, for Brown nothing really matters

    Too late, my bill has come,
    Tax credits turn to fine,
    Head is pounding all the time.
    Goodbye Truth and Justice – the Revenue
    Is no independent judge, and hides the truth.
    Mama ooo – (“Money with your name on”)
    Worse off than before,
    We dearly wish we’d never claimed them at all.

    I see a ghastly silhouetto of a man,
    Scary mush, worse than Bush. To the papers we can go.
    Once there’s an enquiry, watch the Public Outcry – see!

    Primarolo, Primarolo,
    Primarolo, Primarolo,
    Primarolo, did you know, illegal – O!

    But we’re just the poor folk, and who wants to listen?
    We’re just the poor folk, with a poor family –
    Spare us Brown’s debts and this bureaucracy –
    Ombudsman saying so, will you write it off?

    Paymaster: No, we will not write it off. Write it off!
    Chancellor: We will not write it off. Write it off!
    New Labour: We will not write it off. Write it off!
    Will not write it off. Write it off!
    Will not write it off. Write it off!
    No, no, no, no, no, no, no –

    Primarolo, Primarolo,
    Primarolo let me go!
    Jane Kennedy is reviewing illegality, by them, not me!

    Stephen Timms tried to rob me and hold me to blame!
    To New Labour we’re liars – they slander our names!
    Oh Gordon, can’t do this to us Gordon –
    Or you’ve gotta get out, you’ve gotta get right out of power.

    Nothing really matters,
    Anything goes down.
    Nothing really matters, nothing really matters to Brown.

    “Money with your name on”…….

    (With my apologies to the late, great Freddie Mercury.)

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  2. Comment by Alison at 7:32 am on 6th May 2010

    Last offering, as it’s Polling Day:

    I Don’t Feel Like Votin’

    Wake up Thursday morning, Polling day has just begun,
    Tax Credits wreck our lives, you know I’m not the only one,
    You’ve been messing up and carrying on, you wear us down,
    That’s how come we feel so helpless when you’re there, Gordon Brown.
    You’ve strung us along, when it’s clear you’re in the wrong,
    We’re gonna be the ones to put it right.
    You’re gonna move, clock is ticking, you are Doomed,
    Looks like us Voters have the say tonight…

    But I don’t feel like votin’ with the way New Labour plays…
    They make out we’ve a chance, but then they snatch it all away.
    You thought that I could muster up a little cross for you? NO WAY!!
    ‘Cause I don’t feel like votin’, Gordon, no votin’ today!

    I don’t feel like votin’, votin’,
    Even if I find nothin’ better to do,
    Don’t feel like votin’, votin’,
    Why’d you pick on me when I’m not in the mood?
    Don’t feel like votin’, votin’,
    Green, orange or blue, I’d be MAD IN THE HEAD to vote for you!

    Some MPs love to take from us, fulfill their grand desires,
    Clean moats, flip homes, hire pornos out, and live like country squires.
    You’ve got such double standards: they’re let off, while we’re abused,
    Tax credit victims hauled through court, all fixed so they will lose.
    Why now pretend that you’re the poor folk’s only friend?
    We’re gonna tell the whole world how you lied.
    Please understand we don’t trust your thieving hands,
    So pack your bags – you’re going for a ride.

    ‘Cause I don’t feel like votin’ with the way New Labour plays…
    They make out we’ve a chance, but then they snatch it all away.
    You thought that I could muster up a little cross for you? NO WAY!!
    ‘Cause I don’t feel like votin’, Gordon, no votin’ today!

    I don’t feel like votin’, votin’,
    Even if I find nothin’ better to do,
    Don’t feel like votin’, votin’,
    Why’d you pick on me when I’m not in the mood?
    Don’t feel like votin’, votin’,
    I’d rather vote Blue, I’d be mad in the head to vote for you!

    You can’t make me cast my vote with thieving hands around my throat,
    Just put me down, as you fade away into obscurity…

    ‘Cause I don’t feel like votin’ with the way New Labour plays…
    They make out we’ve a chance, but then they snatch it all away.
    You thought that I could muster up a little cross for you? NO WAY!!
    ‘Cause I don’t feel like votin’, Gordon, no votin’ today!

    I don’t feel like votin’, votin’,
    Even if I find nothin’ better to do,
    Don’t feel like votin’, votin’,
    Why’d you pick on me when I’m not in the mood?
    Don’t feel like votin’, votin’,
    I’d rather vote Blue, I’d be mad in the head to vote for you!

    (to the tune of “I don’t feel like dancin'” by the Scissor Sisters.)

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  3. Comment by lindsay murphy at 11:12 am on 26th August 2010

    I’m 34 years old with 2 dependants one 8yrs old and one 15 months old with low disabilities. I’m a lone parent with a shared ownership house. I enrolled onto a full-time course earlier this year not knowning the costs at the time. the costing were released and found i couldnt afford it so approached an employer newly starting out themselves if they would consider me being an apprentist if the college could help. all going well checked with the tax credits and explained i was being taken on as an unpaid apprentist also i was self employed for a new business i was trying to start with my nail tech work. no forecast of income but would be doing no more than 16 hours building up the business but 35 hours altogether with my learning. I was told i was entitled to 80% of my nursery and after school care fees.FANTASTIC! so I was told or thought. It took 2 weeks to get through to the Tax credits as we are fast approaching the start date and I also changed schools so my son and daughter could be closer together 10 miles away. I ring today to be told I am not entitled to any help. I’m stuck I’ve used the last pennies in the pot for anyone else to use that money for an apprentiship and also my childrens child placement can’t be offered to anyone else. I’ve got to find £1000 in the next couple of days for my childrens childcare and my mortgage along with all other bills. The citizens advice bureau can’t speak to me until the 3/9/10 and i dont qualify for a ALG. Thanks MR TAX CREDIT ADVISOR! all those calls to clarify has cost more than you know or care about.

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