Tax Credits (Overpayment) (Hansard, 12 November 2003)

§ Sir Archy Kirkwood
To ask the Chancellor of the Exchequer if he will make a statement on the arrangements that will apply when recipients are required to repay their tax credits following changes in their income; what the maximum period is over which repayments can be made; what penalties exist for those failing to repay; and whether repayment will be required in a lump sum. [134926]

§ Dawn Primarolo
The Inland Revenue has published a code of practice on what happens when tax credit has been overpaid, copies of which are available in the Library of the House.
Financial penalties, and interest, can be imposed only where an overpayment arose because the claimant behaved fraudulently or negligently.

§ Sir Archy Kirkwood
To ask the Chancellor of the Exchequer what internal review procedures exist within the Inland Revenue for tax credit recipients faced with overpayments; and how these procedures differ from those that existed for working families tax credit. [134928]

§ Dawn Primarolo
Working families tax credit was a fixed award based on a snapshot of income and circumstances around the time of claim. Awards of new tax credits, however, are responsive to changes in circumstances and income and can be adjusted to reflect394W changes. The Inland Revenue has published a code of practice on recovery of overpayments of child and working tax credits.

§ Mr. Stephen O'Brien
To ask the Chancellor of the Exchequer what estimate he has made of(a) the number of cases of overpayment and (b) the amount of the overpayment of (i) working families tax credit, (ii) children's tax credit and (iii) disabled person's tax credit in 2002–03. [137642]

§ Dawn Primarolo
Working families and disabled person's tax credit awards were fixed for 26 weeks, based on a snapshot of income and circumstances around the time of claim, and were not amended to reflect changes in the recipients' circumstances or incomes during this period. Provided the award was based on accurate information, overpayments did not arise. Children's tax credit is not a payment; it is a tax allowance which reduces a taxpayer's overall tax liability for the year.

§ Mr. Stephen O'Brien
To ask the Chancellor of the Exchequer when the Inland Revenue will publish the code of practice on overpayment of tax credits. [137643]

§ Dawn Primarolo
[holding answer 10 November 2003]: The Inland Revenue is today publishing a Code of Practice on what happens when too much tax credit has been paid. Copies are available in the Library of the House.

§ Mr. Webb
To ask the Chancellor of the Exchequer (1) in what circumstances overpayments of tax credits are(a) recovered within the tax year in which they occurred and (b) recovered in the following tax year by means of a reduction in tax credit payments; [132597]
(2) how many recipients of tax credits have been overpaid and issued with demands for lump sum repayments; [132598]

§ John Thurso
To ask the Chancellor of the Exchequer how many recipients of tax credits in Scotland have been(a) overpaid and (b) issued with demands for lump sum repayments. [135934]

§ Dawn Primarolo
During the tax year, a tax credit award can be amended to reflect changes in claimants' circumstances or because an overpayment is likely to arise at the end of the year. This may mean that payments are reduced or that no further payments are made because too much has been paid out already. 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 of tax credit are identified when tax credit entitlement is finalised after the end of that year. In addition, overpayments can be identified when, as part of their compliance activities, the Inland Revenue terminate a tax credits award because the claimant had never in fact been entitled to tax credit. In these cases, the overpayment may be recovered as soon as the award is terminated. Around 700 requests for payment in such cases had been made by the end of October, including around 100 to families in Scotland.
The Inland Revenue is today publishing a Code of Practice on what happens when too much tax credit has been paid. The Code will also cover the circumstances in 395W which the Revenue will not seek to recover a debt, for example, in cases of hardship. A copy of the Code has been placed in the House of Commons Library.