Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Update - Parliament

11 December 2005
Categories: News
Hansard, 28 November 2005, vol 440, no 73, col 84w

Tax credits

HMRC are undertaking a long-term pilot to discover the best ways of making sure that tax credit claimants keep their records up to date. Dawn Primarolo said that the pilot aims to contact 15,000 claimants in writing and 15,000 by telephone on three separate occasions between July 2005 and February 2006. In the first wave, which took place in July, HMRC wrote to 15,000 claimants and telephoned 7,500, with the result that some 1,200 families notified HMRC about changes in their circumstances that led to changes to their entitlements.
Explaining how the recovery process works, Robin Williamson, technical director, Low Income Tax Reform Group said that if a claimant tells HMRC of an increase in his income over £2,500 (changed to £25,000 in the pre-Budget report from April 2006) during the year, this creates an overpayment and HMRC's automatic recovery process recovers the whole overpayment. However, if the claimant waits until he has to submit his renewal form, any overpayment is clawed back in instalments taking account of ability to pay. So by encouraging claimants to report income changes in year, HMRC are effectively putting claimants at a disadvantage. Robin said that the in-year recovery process is going to be aligned with the end of year one, but this will not be until November 2006.
As to the increased amount of disregard to £25,000, Robin said that the LITRG welcomes this increase and that it should alleviate the worst overpayments resulting from changes in income, although it would not make any difference to shifts in personal circumstances where for instance a claimant's relationship changes.
 

Categories: News
back to top icon