Families trapped in £6.4m benefits misery (From The Wiltshire Gazette and Herald)

Families trapped in £6.4m benefits misery

'Helen' who has received a bill for £3,568 THOUSANDS of hard-pressed Swindon families are being forced to repay a total of £6.4m in benefits because of tax credit chaos within the Inland Revenue's system.

Figures obtained by the Adver reveal that around 6,500 families will have to fork out an average of £984 each which has been overpaid.

The error has been blamed on a crisis gripping the troubled tax credit system.

Of nearly 20,000 payments made in Swindon in 2003-4, just over 30 per cent were incorrect.

Benefit advisers are furious, saying the neediest people are being penalised by confusion within the Inland Revenue system.

Solicitor Sylvie Leavey handles benefit queries at the Wiltshire Law Centre in Swindon.

She called for a major overhaul of the scheme.

"The tax credit system cannot cope," she said.

"Clients provide all the correct information, but it is not processed properly, and then they are asked to pay back the cash.

"The overpayments were made because they were based on information from the previous two tax years, and things are bound to change."

Incorrect payments also lead to problems with other benefits.

"It pushes up people's earnings, which means they get less in housing benefit and council tax rebate," said Ms Leavey.

There are also problems getting through to the Inland Revenue to make queries, and letters go unanswered, she said.

Working tax credits and child tax credits mean workers can top up their salaries by as much as £5,500 a year. Claimants must predict their income for the year ahead and inform the Inland Revenue whenever it varies.

The scheme was launched in April 2003 amid chaotic scenes at call centres when millions of families queried payments and phone lines jammed.

The latest figures show that out of a total of 5.7 million tax credits made to families in 2003-4, 1.9 million, or a third, were overpaid.

There have been calls for an amnesty and some people have received letters informing them that they will not have to pay the credits back.

But the majority of families in the UK have had to pay back the cash.

There is an appeals process against repayment orders but of the 46,000 families to appeal just 1,600 succeeded.

Paymaster General Dawn Primarolo has announced a six point plan to clear up the mess.

She said the Inland Revenue will do more to identify families most at risk from overpayment.

A new helpline is also being launched.

Mrs Primarolo also pledged that recovery will be suspended in genuine hardship cases until disputes are resolved.

She admitted computer problems had sparked the situation.

"It is now well known that in the early months of 2003-4 the Inland Revenue encountered serious problems with the new IT system, resulting in overpayments and other difficulties," she said.

I was shocked to be told I have to give back £3,500

HELEN had the shock of her life when she received a demand to repay just over £3,500.

The 23-year-old of The Prinnells, who asked for her full name to be withheld, has been told to pay back every penny she received in working tax credits.

Because the error was not her fault, she is hoping the £3,568.50 debt will be cancelled.

But she is not hopeful.

"I didn't want money that wasn't mine, but I was told I was entitled to this," said Helen, not her real name.

"Everything's such a mess, they don't know what they're doing."

Helen was urged to apply for tax credits by her local JobCentre in April 2003.

"I was starting a part-time job as a sales assistant, and I just thought I'd find out if I was entitled to any other benefits," she said.

"The form was simple to fill in, they just asked me where I was working and how many hours I would be doing.

"Then the cash just started going into my account, about £270 a month.

"I was really surprised, but I just thought they must know what they are doing."

The blunder came to light in July last year.

Since then she has faced a battle to get answers.

"Whenever you call, they don't know anything about your case, and can't find the details on the computer and can't answer questions," she said.

"I wrote them a letter in November, and they lost it, and I haven't heard back."

When the news drops through your letterbox

SWINDON families will first discover they have been overpaid tax credits when they receive a letter from the Inland Revenue.

Any family which disputes the overpayment should call a local rate hotline on 0845 300 3900.

Alternatively, they can visit their local Inland Revenue inquiry centre.

Tax officials say the most common reason for overpayment is because people fail to tell the Inland revenue when their salaries change. People who get a promotion at work or couples who marry may see their household income soar but this will also cause their tax credits to fall.

The Inland Revenue will seek to claw back the cash once they find out about the increased income normally at the end of the tax year.

In 90 per cent of cases, families will pay back the cash by having next year's tax credits reduced.

But in the remaining cases the overpayment will be so great that they have to send the Inland Revenue a cheque.

Treasury officials wrote off a staggering £37m of payments under £300 in 2003 because the overpayments were due to a Government computer glitch.

But yesterday Inland Revenue spokesman Patrick O'Brien said that all cash would have to be paid back if it was proved overpayment was not the fault of tax officials.

He said: "There would be no question of putting anyone in hardship.

"Each case is unique and would be treated sensitively."

Tamash Lal