§ Lord Taylor of Warwickasked Her Majesty's Government:
How the Inland Revenue intends to claw back money it overpaid under the child tax credit scheme. [HL5202]
§ The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)The Inland Revenue encourages people to report changes in their circumstances or income during the year, so that their awards can be adjusted and the right amount of tax credit paid over the year.
When awards are adjusted, it may mean that tax credit payments are reduced because too much has been paid out already or that no further payments are 184WA made because the full amount of tax credits believed to be due has been paid out. To make sure that payments are not reduced to a level that would cause hardship, however, the Inland Revenue makes additional payments if that would be the case.
Overpayments identified when awards are finalised at the end of the year will, where possible, be recovered by reducing the following year's tax credit award. If there is no continuing tax credit award, the Inland Revenue may ask for direct payment or the amount owed can be recovered by adjusting a PAYE code.
The Inland Revenue will be publishing a code of practice on what happens when too much tax credit is paid. The code will also cover the circumstances in which the Inland Revenue will not seek to recover a debt, for example, in cases of hardship.