by Paula Dean
I get a lot of HMRC stamped mail to my address what with handling some peoples cases for them, but I can always tell straight away which ones involve my case (they address me differently), so when this one came through the door last Friday I ignored it for a few days. This has become standard practice for me when it involves my own case. When I get a HMRC letter regarding someone else’s case it stirs me into action, but when I know it’s about my own case I just dread opening it because I know the content is going to send me ranting to my files, cursing about never ending circles.
I know from a lot of the people I talk to that many feel this way when they receive case letters. We know it doesn’t really work, but we try avoiding it for a while, knowing full well that opening the letter could spoil the day, result in cancelled plans and endless contradicting phonecalls and mean more hours spent looking for and searching paperwork. And that’s just if it doesn’t contain threats of immediate prosecution or pulling our financial rug out from underneath us again.
But when I finally opened the letter, I honestly believe that if I had been within striking distance of the author I’d be in more trouble right now then having a £5K ‘debt’ I didn’t cause to deal with.
To cut a long story short, this letter was a response to a Request to Reconsider Recovery letter I had supposedly sent HMRC recently. Immediately I was confused as my dispute is with the Parliamentary Ombudsman and has been for about a year now. So why would I have written a RRR to HMRC. The letter then goes on at some length to detail known facts about my case and then rehashes the same excuses used previously to try and pass off the ‘overpayment’ as my fault.
What’s shocking about this is that actually the letter being ‘responded’ to was not a RRR or anything of that type, and in fact it was addressed to my local tax office, not the Preston TCO Customer Care (sic) dept that was responding. It concerned a recent phonecall where the local tax officer insisted that I had to do HMRC jobs for them in keeping the local tax office up to date with the status of my dispute. I was writing to 1) prove the status of my dispute and 2) to complain at being expected to do HMRC liaison for them.
Nowhere in this short 3 paragraph letter did I request HMRC reconsider the overpayment or request a re-run of their excuses. The nature of the letter is plainly evident - as is my name, gender and title, yet the chauvinist pigs still addressed it to my husband!
So what has this exercise in futility achieved? Nothing! My case is still with the PO, no one has responded to my complaint about being expected to do HMRC’s job for them, I have now had to write and research 2 letters not even relevant to the overpayment and the HMRC author managed to spend several working hours on a response to a letter they plainly didn’t read.
This afternoon I agreed to take part in some ‘customer research’ being conducted for the Adjudicators Office. I mainly just had to answer; agree / disagree and strongly / slightly to about 30 questions, but I got the chance to comment at the end of the interview. When asked what I would like to say about the Adjudicators Office, (resolving to remain constructive lol) I said that “I felt the AO did not take relevant circumstances into account when adjudicating disputes. Members of the public when complaining about the conduct of a government body to the AO are being expected to conduct themselves in the same manner of the agencies involved. I.e. we are expected to keep as good a tax record as the Tax Office even when we didn’t know we would need to. Yet this is not our professional capacity (i.e. our job), while it is solely HMRC’s, so they should be expected to do it better than us."
To quote the ironic recent HMRC letter; “it is clear that we have not handled your tax credits claim as well as we should have, and that we have failed to provide the level of service which you are entitled to expect and should received.”
No kidding!
Paula (disheartened? Maybe a little .... Giving up? Never!)
http://www.taxcc.org/
Wednesday 19 November 2008
Wednesday 12 November 2008
Why tax credit overpayments must be written off
by Alison Myers-Ward
When I told the Sunday Times recently (27th July 2008) that the ruthless pursuit of tax credit overpayments caused by the Revenue’s own unfit IT systems, random errors and maladministration had ‘destroyed lives’, HMRC rejected our call for a full write off. They grumbled that our audacious Tax Credit Casualties group ‘wants us to write off billions of pounds worth of taxpayer money’.
It’s true – we do!
The sum involved reflects the scale of HMRC’s ineptitude, which will never improve whilst victims foot the bill and bear the pain alone. Low-income ‘customers’ took up Brown’s hollow ‘Money with your name on it’ incentive to work hard for low wages. They gave the Revenue their correct details and trusted the ‘experts’ to do their jobs.
Instead, the Revenue miscalculated their awards in ways impossible for claimants to spot: HMRC failed to act on changes promptly notified, failed to detect criminals hijacking honest claims (including many of their own employees), zeroed people’s salaries, made children vanish and overpayments appear, and generally acted true to their data-disc losing form. Hapless claimants accepted and spent the money in good faith, only to receive shock demands for thousands of pounds a few years down the line. Two things are abundantly clear. Firstly, an extraordinary amount of taxpayers’ money was routinely handed away by HMRC in error – about £2.8 billion. Secondly, there is a growing feeling that coming back for this several years later only compounds the problem, heaping injustice, terror and despair on the innocent. Didn’t Brown’s mother ever tell him that two wrongs don’t make a right?
Brown’s New Labour and HMRC have pulled off a remarkable coup: they have passed off their errors and failure as the claimants’ own. No public debate on writing off tax credit overpayments is complete without Mr. or Ms. Angry erroneously demanding that Working Tax Credit recipients find themselves a job and stop ‘scrounging’. Far from avoiding the stigma of claiming top-up benefits by accepting tax credits, claimants find themselves in a double-whammy. It’s a TAX credit, so overpayments are treated as tax arrears, with the full fury of the tax office unleashed, and the onus on the recipient to prove their honesty rather than on HMRC to prove their negligence. Yet in the public’s eyes, it’s still a benefit, and one they begrudge. Add the prefix ‘claimant’ to all discussions of ‘fraud and error’, and the victim cannot win.
Small wonder that Brown and HMRC have closed all discussions on tax credits, and simply repeat the mantra that they are helping six million families. They fail to add that with up to a third of tax credit claimants being overpaid each year, two million families each year face huge bills, court action, bailiffs and the despair this brings. Freedom of Information requests are rejected, and HMRC cannot or will not specify what proportion of these overpayments it has created itself. Treasury secrecy reinforces the growing belief that, in financial terms alone, recovery is costing the taxpayer considerably more than a write off. Report after report seeking Amnesty and system reforms has been ignored, with critics including:
When I told the Sunday Times recently (27th July 2008) that the ruthless pursuit of tax credit overpayments caused by the Revenue’s own unfit IT systems, random errors and maladministration had ‘destroyed lives’, HMRC rejected our call for a full write off. They grumbled that our audacious Tax Credit Casualties group ‘wants us to write off billions of pounds worth of taxpayer money’.
It’s true – we do!
The sum involved reflects the scale of HMRC’s ineptitude, which will never improve whilst victims foot the bill and bear the pain alone. Low-income ‘customers’ took up Brown’s hollow ‘Money with your name on it’ incentive to work hard for low wages. They gave the Revenue their correct details and trusted the ‘experts’ to do their jobs.
Instead, the Revenue miscalculated their awards in ways impossible for claimants to spot: HMRC failed to act on changes promptly notified, failed to detect criminals hijacking honest claims (including many of their own employees), zeroed people’s salaries, made children vanish and overpayments appear, and generally acted true to their data-disc losing form. Hapless claimants accepted and spent the money in good faith, only to receive shock demands for thousands of pounds a few years down the line. Two things are abundantly clear. Firstly, an extraordinary amount of taxpayers’ money was routinely handed away by HMRC in error – about £2.8 billion. Secondly, there is a growing feeling that coming back for this several years later only compounds the problem, heaping injustice, terror and despair on the innocent. Didn’t Brown’s mother ever tell him that two wrongs don’t make a right?
Brown’s New Labour and HMRC have pulled off a remarkable coup: they have passed off their errors and failure as the claimants’ own. No public debate on writing off tax credit overpayments is complete without Mr. or Ms. Angry erroneously demanding that Working Tax Credit recipients find themselves a job and stop ‘scrounging’. Far from avoiding the stigma of claiming top-up benefits by accepting tax credits, claimants find themselves in a double-whammy. It’s a TAX credit, so overpayments are treated as tax arrears, with the full fury of the tax office unleashed, and the onus on the recipient to prove their honesty rather than on HMRC to prove their negligence. Yet in the public’s eyes, it’s still a benefit, and one they begrudge. Add the prefix ‘claimant’ to all discussions of ‘fraud and error’, and the victim cannot win.
Small wonder that Brown and HMRC have closed all discussions on tax credits, and simply repeat the mantra that they are helping six million families. They fail to add that with up to a third of tax credit claimants being overpaid each year, two million families each year face huge bills, court action, bailiffs and the despair this brings. Freedom of Information requests are rejected, and HMRC cannot or will not specify what proportion of these overpayments it has created itself. Treasury secrecy reinforces the growing belief that, in financial terms alone, recovery is costing the taxpayer considerably more than a write off. Report after report seeking Amnesty and system reforms has been ignored, with critics including:
- The Parliamentary Ombudsman.
- Treasury Select Committee.
- Public Accounts Committee.
- Advice Northern Ireland.
- Citizens Advice.
- Low Incomes Tax Reform Group.
- One Parent Families.
- Child Poverty Action Group.
The Tax Credit Casualties’ own Voices of the Victims has also failed to elicit any response from the Prime Minister, despite former Labour leadership contender Jon Cruddas publicly calling for an Amnesty.
HMRC’s bungling bureaucracy is steadily being exposed through data protection requests, where officials can be heard, on CD, assuring claimants that their awards are correct, admitting that the zeroing of salaries is a common problem, and sharing claimants’ frustration that recovery action is commonly accelerated to cut off legitimate dispute. Claimants can prove they advised HMRC of income changes, that HMRC ‘lost’ their children from claims, and that they sent in renewal packs that HMRC cannot find.
It is evident that data discs, laptops and chairmen are not the only things HMRC loses. It loses all kinds of things, from phone calls and letters to children and NI details, with alarming regularity, complete impunity and – it seems – the blessing of our Prime Minister.
Incompetence and non-accountability are dangerous enough, but added to this, HMRC has the power to:
- Write its own Certificates of Debt to break the innocent in court.
- Deny the right of reply in court on production of this Certificate.
- Open investigations on law-abiding claimants without telling them.
- Act as Judge and Jury in its own cause.
- Use tax recovery laws to withhold evidence harmful to its own caseRecover overpayments without warning, or deduct via taxation.
- Give the ‘independent’ Adjudicator and Ombudsman a biased internal report which the claimant has no right to see or correct in advance of judgement.
- Send tax officials to customers’ doors.
- Send bailiffs to recover people’s possessions.
Not only are claimants not advised that they have the right to dispute recovery of any alleged overpayment, but HMRC information factsheet, DP F/S1 states: “The law also allows us to withhold information, for example, where release would be likely to prejudice… the assessment or collection of any tax or duty” since a tax credits overpayment will be “treated for the purposes of Part 6 of the Taxes Management Act 1970 (c. 9) (collection and recovery) as if it were tax charged in an assessment” (The Tax Credit Act 2002, section 29, subsection (3)).
Only recently have taxpayers won the right to sue HMRC for damages – legal costs permitting. Surely an Orwellian novel in the making?
No wonder, at Tax Credit Casualties, we hear more horror stories every day, including reports that claimants have killed themselves or suffered a heart attack brought on by the stress of being hounded by ruthless tax officials. Unsurprisingly, people are turning away from tax credits and the Labour party in droves.
A full write-off is not only just, but prudent. How much does recovery cost? How much money goes unclaimed? How much is being wasted elsewhere? How much does it cost the country in hidden costs caused by tax credits – sick leave, ill health, and previously self-sufficient people sinking, through stress, into greater dependency on incapacity benefit or being trapped in low-paid work because debt has left them unable to improve their lives and reach their potential? What about the human cost?
Just as tax credits were being launched in Britain, Australia declared an Amnesty on its own overpaid tax credits. HMRC has never refuted claims that recovery costs exceed the amounts reclaimed, and remains silent on the costs of the average dispute, let alone the full dispute process. We now know that recovery is more about control of the citizen and protection of political reputations than about cost-effectiveness, concern for the public purse, or for social justice.
Finally, I will leave you with a few other sums, facts and figures which politicians need to bear in mind when considering whether a write-off should be given:
- The “Money with your name on it” advertising campaign cost £9 million (Source – Dawn Primarolo).
- Paul Gray, the senior civil servant responsible for tax credits, quit HMRC after the two data CDs went missing last November, with a pension pot worth over £2 million (Source – the Sunday Times).
- The total amount given to senior managers at HMRC in bonuses is £23 million. (Source – Treasury Select Committee). Nevertheless, HMRC chief Dave Hartnett says morale is 'not high', and the Tax Credit Casualties continually hear that tax recovery officials hate hurting the poor (Source – Accountancy age and personal communication).
- Only 15% of civil servants believe their senior managers are providing “effective leadership" (Source - the Guardian).
- Value of the tax credits unclaimed last year alone - £4.3 billion (Source – Citizens Advice). Claimants are simply too afraid of mistakes to claim.
- Calls handled by Citizens Advice last year by people confused by the credit and benefit system – 3.5 million (Source – Citizens Advice).
- The costs, according to the Sunday Times, of freeing the poor from an undeserved tax credit debt? £2.8 billion.
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