Tax credit '£1.5bn overpaid'
4 Aug 08
The public spending watchdog has refused to sign off the accounts of Revenue & Customs for the sixth successive year after discovering that as much as £1.5 billion may have been overpaid in tax credits
According to the National Audit Office (NAO), in the four years since the tax credits scheme was introduced, the department has overpaid by £7.3 billion. The report explains claimants have not always understood their obligations or received the support they needed from the department.
As a result, the NAO says, over and underpayments have occurred because the department has made payments based on “out of date information”.
The NAO report shows that at the end of March 2008, there were 16.2m cases where records of PAYE income tax payments for earlier years still needed to be “reconciled and cleared”.
As a result of an “error” of non-collection, 420,000 pensions would be affected with a tax loss of £135m a year.
Edward Leigh, chairman of the parliamentary public accounts committee, warned that the Revenue’s latest identified shortcomings would add to the financial woes of “vulnerable families” who have been overpaid and face long-term repayments to the government “through no fault of their own”.