Letter From Mike Hancock CBE MP to The Parliamentary Ombudsman
16 September 2009
Ann Abraham
Parliamentary and Health Service Ombudsman
Millbank Tower
Millbank
LONDON SW1P 4QP
OUR REF: MA/TAX CREDITS/ADMINISTRATION
16 September 2009
Dear Ombudsman,
I am writing to you about tax credits and their administration. This follows your report in 2005 as it seems to me from my work as a constituency MP that there is still a very significant problem over their administration as it would seem from my experience there has been very little progress on improving it. In addition, actually quite a large proportion of your recommendations remain unimplemented by the Government. This is despite the fact that the report was issued in 2005, some four years ago. So it would seem to me that the Government has had a long time to implement the recommendations.
I appreciate that you make your reports to Parliament and
it is up to Government to decide what action if any to take on this but I hope
that you will consider what further action you can take to improve the situation.
I am sure that you will be aware that the number of overpayments increased last
year and remain at approximately 1 in 5 of claims. While I appreciate this is
less than the 2005/06 level, there is a feeling that a technical change of
increasing the “income disregard” to £25,000 is responsible to large degree for
the decrease in claims compared to 2005/06.
I also believe that this is a serious issue because I still
have a large number of constituents coming to me as an MP distressed by suddenly
having a demand from HMRC for a very large amount of money and we are talking,
by definition, of some of the least well-off people in the country. In addition,
confidence and trust in the system has been so shredded that many people are
also telling me that the just do not want to claim tax credits for fear of
having these demands. I note that an estimated £4.24 billion in tax credits is
not claimed each year (compared to £940 million in overpayments).
As I say, it seems to me that a number of your
recommendations have not been implemented. In particular:
Recommendations 5-9 deal with possibility that those who have received overpayments and in hardship might receive Additional Tax Credits (ATCs). As far as I can see, having checked a recent overpayment notice no mention is made of these by HMRC in letters or correspondence and I am really only aware of them having read your report.
Recommendation 10: Suggests that an “amnesty” should be given for overpayments between 2003 and 2005. I am not aware that the Government has done this.
Recommendation 12 says: “The Revenue should reconsider the way it organises delivery of tax credits in order to deliver a better, more complete service to the
customers it now serves. A different model is needed in complex cases…” As I say the number of overpayments seems to have stayed roughly the same so it is clear that it is not succeeding at this.
As I say this is a very serious problem as this is money that Parliament has decided people should have through the tax system but many people are not claiming it and I believe that this is significantly because of a breakdown in trust and confidence in the system. In addition many of those that do claim are having the difficulty, distress and shock of having overpayments.
I would be grateful therefore if you could tell me what you will be doing to continue to pursue this and whether you will issue another report or hold discussions with the Government so that the system can be improved for the people of this country.
I would be grateful therefore if you could tell me what you
will be doing to continue to pursue this and whether you will issue another
report or hold discussions with the Government so that the system can be
improved for the people of this country.
Tax Credit Casualties (TCC) is a voluntary, unfunded, not for profit
organisation run by members for members. We cannot take any responsibility for
decisions made by HMRC, The Parliamentary Ombudsman, The Adjudicator, or any
other organisation, regarding claimants cases. We offer free advice on how to
dispute unfair overpayments based on our own experiences, the experiences of
other claimants and HMRC guidelines.
Please note that we are not tax professionals and are working on a voluntary
basis, unpaid, in our ‘free time’. Between us, we have a lot of experience and
knowledge in this area, gained over the last few years of supporting victims and
helping them fight for justice and their rights. Legislation, operating
practices and individual cases change all the time, and while we aim to be
professional and accurate at all times, please understand the circumstances we
are working under and accept our support, guidance and information in the sprit
it is offered; goodwill and camaraderie.
Our Standards
TCC was established to provide advice and guidance on disputing recovery of
non-fraud tax credit overpayments and to lobby for fundamental change on the
inbuilt flaws and inequalities of the tax credit system. Whilst TCC provide
guidance and information on how to handle disputes and even provide an advocacy
service in some instances, neither TCC as an organisation not any participating
members are responsible or liable for outcomes of disputes which remain wholly
the remit of HMRC, the Adjudicator and/or the Parliamentary Ombudsman, as
appropriate and dependent on the stage of dispute. TCC operate in a professional
manner and endeavour to give accurate and appropriate advice based on
information provided by members. TCC endeavour to respond to members as quickly
and efficiently as possible, given the voluntary nature of the organisation and
limited resources available. TCC is an inclusive organisation and will treat all
members in a fair and equitable manner.
