While the tax credits system has been under major pressure of late, the announcement that officials from HM Revenue and Customs have actually broken their own rules regarding the reclaiming of over paid tax credits has set more alarm bells ringing.  The cost of this “oversight” is rumoured to be in the region of £500 million, although the authorities insist it is nearer £20 million.

It seems as though a number of claimants over the last few years were unaware of the fact that their payments were being investigated, with many receiving unexpected demands to repay “over payments” from prior years.  Under strict guidelines the authorities should have written to each claimant being investigated, to make them aware of the situation and what may happen - this task was not carried out for many.

To say that the tax credits system has been a shambles is an understatement, with literally billions of pounds of tax payers money wasted.  What was in theory an excellent idea has turned into a nightmare for the government, and Gordon Brown in particular who introduced the system.  It seems that while many claimants had informed the authorities of changes in their situations, the information was never logged into the relevant systems and over payments / under payments have been common place.  The literature which was sent to many claimants was also very hard to understand, with figures changing on a regular basis!

There have been numerous attempts to resolve the problems with the system but it seems that each resolution is followed by another problem, and the authorities are currently in disarray.  Quite where this leaves the long term viability of the system remains to be seen.