28 Jul 2008
Faults embedded in tax credit software combined with "rogue" files that could not be erased from the system are among causes blamed for losses totalling a potential £2.8bn by HM Revenue & Customs (HMRC).
The losses have emerged after victims pursued for "overpayments" by bungling officials used data protection legislation to obtain copies of their own files to prove it was official error and not fraud or delay on their part that caused huge overpayments.
Sarah McCall, a spokeswoman for information and support group Tax Credit Casualties, said a common problem that emerged was that when operators at tax credit call centres changed screens earlier information was deleted. In some cases this led to spouses' incomes being automatically zeroed in spite of information supplied by applicants.
She said another error, claimed to have since been corrected, arose when operators who were unable to delete or correct data on earlier files created new ones, leaving the earlier "rogue files" to cause on-going problems.
The file involving one claimant who was being pursued for over £6,000 in overpayments showed what were described as "software glitches" causing a series of errors, including the wrong income details and the removal of his six-year-old daughter from some assessments.
Other files obtained also indicate "computer error" persisting since the original faults when the system was set up in 2002. The National Audit Office qualified the latest HMRC accounts because of money lost through overpayments and fraud.
An HMRC spokeswoman told Computing: "Due to taxpayer confidentiality, HMRC
cannot discuss any individual cases. There are no so-called 'glitches' in the
system – the tax credits system is working well,
and the accuracy rate for our processing stands at 97 per cent."
The spokeswoman confirmed £1bn has been written off and provision has been made to write off a further £1.8bn.
EDS, the original government contractor, agreed to pay just £71.25m in compensation for initial computer problems.
I have been claiming Working Tax Credit and (until this year) Child Tax Credit for the past 5 years. I have just been sent: a 'revised' WTC assessment, stating that I owe them over £3,500; two demands, with attached payment slips, for 'overpayments' for 2004-2005 for £600+ and 2005-2006 for £170+. Since I have always been honest and kept the Department up to date with any changes in my circumstances - I do not understand how they can have miscalculated my payments to such an extent. They did advise me on my assessment forms each year that overpayments had been made, but that they would take it out of future award payments. How, then, do I owe them so much? And so far backdated? Since my income (at 53 years of age and dozens of full-time job shortlistings but no job) has been around £10,000 pa for several years, these demands amount to more than half my annual income. I make every effort to find work and do NOT want to claim further benefits. A scheme which is supposed to aid those of us who are temporarily financially embarrased has now resulted in severe financial hardship for me. How could they not have adjusted their estimates accordingly? Why, if I was supposedly been overpaid every year, did they continue to pay money into my account? Why wait until 2008 to claim 'overpayments' from 2004 to 2006? Why now is the onus on ME to argue against THEIR gross miscalculations and errors. This situation is upsetting, stressful and totally unacceptable. What makes it so galling is that I am being chased for money received, based on my trust in their calculations (in turn, based on my honest information), when families known to me fraudulently claim thousands of pounds per year in benefits and enjoy: new cars, foreign holidays, evenings out and designer clothing - none of which I can afford - especially now that the Tax Office has placed me in a position of debt. Fiasco is right!
Posted by: Mrs Anne Hamilton 08 Aug 2008
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