Tax Credit Overpayments

Tax Credit Overpayments

December 3rd 2010 12:29 am

general

The Government reports that up to £400 million is being overpaid annually in tax credits. They are laying the blame on the s ...

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The Government reports that up to £400 million is being overpaid annually in tax credits. They are laying the blame on the shoulders of parents who are not reporting changes to their childcare costs to HM Revenue & Customs. In the 2008/2009 tax year alone 4.5% of all tax credits paid out contained errors relating to tax credits, the monetary loss being around £380 million. Families who are receiving tax credits must notify HMRC within one month if their childcare spend falls. Deliberately keeping this information from HMRC when renewing a tax credit claim could possibly be construed as fraud and lead to prosecution. Tax credit receipients will be receiving a letter to detail this reminding them to contact HMRC is their childcare costs fall by £10 or more, or end as the child starts school full-time. Additionally, parents must notify HMRC is their childcare provider is no longer approved/registered, if the parent is getting childcare vouchers from their employer or if they begin to get early learning or nursery education support. The crackdown by HMRC signals a wider progression of the Government commitment on reducing error and fraud in the benefits system. Earlier in October letters were sent reminding tax credit recipients to notify HMRC is a partner has moved in or out of their home. Flexibility is built into the tax credit system, adjusting the credit amount for each claimant according to their changing circumstances.

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