Julian Knight: The intention was great but the execution is a scandal
Sunday 14 October 2007
Amid the furore over Chancellor Alistair Darling's "magpie" pre-Budget statement, two damning reports on the tax credit fiasco barely got a look-in last week.
But the credits affect the everyday lives of up to six million British families – far more than will have to deal with inheritance or capital gains tax.
The two reports – one from charity Citizens Advice and the other from Parliamentary Ombudsman Ann Abraham – paint a picture of a tax credit system that is still driving thousands of families into debt and despair. And just as depressing is that both the charity and Ms Abraham have said all this before.
Previously, vast improvements were promised by HM Revenue & Customs (HMRC) and ministers. Yet judging by letters to this newspaper, the nightmare continues. Here is one gem cited by Ms Abraham. It centres on the application, by HMRC officials, of the "reasonable belief test" – or whether recipients could really think overpaid tax credits were theirs.
In this case, a claimant actually called HMRC to check the accuracy of a credit award and was assured that all was fine. But later the individual was told a mistake had been made and the cash had to be repaid. A bright spark at HMRC argued that the claimant's decision to check the award meant they could not reasonably believe it was theirs. A catch-22 worthy of the pen of Joseph Heller. Sadly, such tactics aren't out of the ordinary as some HMRC staff look to shift the blame for mistakes on to claimants.
The intention behind tax credits is spot on. It was one of the great inequalities of the Tory years that many families were better off on benefits than in work. But the delivery is a scandal: a third of all tax credits were overpaid in 2005-06 at a cost of more than £1.5bn.
Again, HMRC promises that improvements are just around the corner. It is increasing something called "income disregard". In English, this means claimants would have to inform HMRC only if their income had gone up by over £25,000 during a tax year, rather than £2,500 as previously. But even the taxman reckons this will cut overpayments by only a third.
As in the case of the now-defunct Child Support Agency, the debacle will run for years. An alternative could be to boost the personal income tax allowances of people with children – a change under which some poorer families would lose and richer ones benefit unjustifiably. But at least such wheezes as the "reasonable belief test" would be jettisoned.
- 1 Diary of Second World War German teenager reveals young lives untroubled by Nazi Holocaust in wartime Berlin
- 2 Breaking the Silence: In the reality of occupation, there are no Palestinian civilians – only potential terrorists
- 3 Uri Geller psychic spy? The spoon-bender's secret life as a Mossad and CIA agent revealed
- 4 Viral video straps colt .45 handgun to a home-use drone
- 5 Vice pulls 'breathtakingly tasteless' fashion shoot glorifying the suicides of famous female authors from Sylvia Plath to Virginia Woolf
iJobs Money & Business
£65000 - £85000 Per Annum: The Green Recruitment Company: The Green Recruitmen...
£400 per day: Orgtel: A top tier banking client urgently requires a Senior Bus...
£250 - £350 per day: Orgtel: Financial Crime Analyst,Midlands, Banking, AML/Sa...
£20,000 - £45,000 OTE: Co-Venture: Working for this company will give you a ch...
Day In a Page
A smartly presented two-bedroom cottage, extensively refurbished with sun-filled garden and terrace, £350,000
A Victorian barn conversion at Heath End Farm with four bedrooms. £1.25 million.
A spacious two-bedroom flat within an impressive Victorian terrace building, close to Fulham Road and New Kings Road, £375,000.
A two-bedroom flat at Grafton Court, a former manor house in the village of Temple Grafton, with private terrace, £450,000
A four-bedroom listed mews in Apley Castle with impressive drawing room, £425,000
A two-bedroom flat close to the Regent's Canal with a private patio and a concierge service. £500,000
A two-bedroom flat at the Candlemakers Apartments set over two floors with a balcony. £625,000.
This three-bedroom Grade II-listed thatch in the pretty village of Wigginton. £450,000.
A new two-bedroom flat with a bright open-plan reception and skyline views. £450,000.
A modern home of almost 1,000sq ft is close to Stoke Newington's high street. £499,950
A five-bedroom bungalow in Hoveton with riverside garden and mooring dock, £550,000
A refurbished one-bedroom flat with south-facing reception and high ceilings. £579,950
A four-bedroom Grade II-listed house in Nazeing with large gardens. £550,000
A modern four-bedroom house in a converted stable within walking distance to Peckham Rye. £695,000
Three-bedroom house in a quiet residential area within close distance to Battersea Park. £450,000
A three-bedroom cottage within commuting distance of London, Norwich and Cambridge. £250,000
A two-bedroom cottage with a sun room and gardens in South Chard. £350,000.
A three-bedroom semi-detached house with original features including fireplaces and wooden flooring. £399,950
A modern two-bedroom flat split across two floors and close to several public transport links. £595,000