Inland Revenue standard report : new tax credits, thirty-seventh report of session 2005-06, report, together with formal minutes, oral and written evidence

In 2004-05, HM Revenue and Customs paid GBP 15.8 billion of Tax Credits.

The Department recalculates each award annually and has identified that for 2003-04 it overpaid some GBP 2.2 billion to 1.9 million families.

It believes that 2004-05 will see a similar level of overpayment.

This is partly due to the nature of the scheme where awards are provisionally based on previous income whilst the final award is based on actual income.

However, the level of overpayment has been higher than was initial estimated and repayments have caused distress to some families.

This report looks at measures being taken to reduce overpayments; claimant error and fraud; and the settlement with EDS over problems with the computer system.

The Committee attaches great importance to this subject and wish to return to it in the future.