tax credit nightmare

When lone parent “Karen’s” daughter dropped out of college in October 2005 Karen thought adjusting her tax credits to compensate for this would be a relatively straightforward and painless exercise.

Having told the tax credit office of her change of circumstances she was shocked when she received a letter stating she had been overpaid by £2,500 for that year and £320 from previous years. She queried this and was even more shocked to receive a letter saying that the bill had increased to over £12,000 covering three years.

Panicking at the prospect of owing so much money she contacted Stoke CAB for help. Our benefits team contacted the tax credit office to get an explanation from them as to how they had calculated these figures, which they were unable to provide; but continued to send her demands for £12,000.

We helped her appeal the decision to recover the overpayment and as part of the appeal process asked for a breakdown of her entitlement and a breakdown of how the arrears had been calculated. We also checked her current circumstances and calculated she was still entitled to some £70 a month tax credit which was not being paid to her.

After almost a year’s negotiation and argument the tax credit office resumed payments, but had to do so by issuing a cheque due to what they described as “technical difficulties”.

It was not until March 2007 that they finally conceded that the alleged arrears also appeared to be due to similar technical difficulties. Unfortunately, this did not prevent them continuing to demand a repayment.

Finally, after three years, seven formal complaints and numerous phone calls to the tax credit office they agreed that “Karen” owed them nothing and the matter was closed. Unfortunately, these technical difficulties mean that rather than having the money paid into her bank account every month, “Karen” continues to receive cheques from them.

”Karen’s” experience while being one of the worst we have come across,” said benefits case worker Sarah Honeysett, “is by no means untypical. The tax credit system can become a bureaucratic nightmare for many people.

“The systems are highly automated and far from perfect which means getting to the bottom of problems can be extremely difficult.

“Karen had tried on a number of occasions to sort this issue out before she came to us but it took our persistence and expertise to finally resolve this issue and prevent her having to repay £12,000 she had never owed in the first place.