£1m payout for tax credit mess

THE Inland Revenue has paid out almost £1m compensation to people who suffered delays or errors in receiving their tax credits.

More than 6m people claim either child tax credit or the working tax credit. But there were problems introducing such a big new system and thousands received wrong or late payments between April 2003 and August this year.

The Inland Revenue has now paid out a total of £940,000 to them for the 'worry and distress' caused.

An Inland Revenue spokeswoman said: 'With a project of this scale things will occasionally go wrong, but we make every effort to minimise mistakes. When they occur, we sort things out as quickly as possible.'

During the 2003/2004 tax year the Inland revenue received 10,800 complaints about the tax credits, only 255 of which were turned down, giving complainants just over a 97% success rate.

One of the problems with the new system was that people's entitlement for the credit in 2003/2004 was calculated according to their income in 200 1/2002, meaning many people received too little or too much money.

However, the Revenue said if people were overpaid as a result of an error on its part and it was reasonable for them to think they had received the correct amount, it would not ask for the money back.

People who have been overpaid tax credits but think the Inland Revenue was at fault should complete a TC846 form, available from the Inland Revenue's website.