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Last Updated: Tuesday, 29 July, 2003, 12:32 GMT 13:32 UK
Tax credit payouts average 70
By Sarah Toyne
BBC News Online personal finance reporter

Revenue is increasing staffing to deal with complaints

The Inland Revenue is paying out average compensation of 70 to tax credit victims, BBC News Online has learned.

So far 13,000 complaints have been brought against the Revenue over the way it handled the introduction of the new tax credits in April 2003.

But the rush of complaints is creating a backlog in its area offices, and the Revenue said it would be drafting in extra staff to cope.

Only 20 people had so far been compensated, but 400 other payments were waiting to be sent out, a spokesman said.

"It sounds like an awful lot of complaints but there are 5.8m tax credits in payment at the moment, and 13,000 is only a tiny percentage."

Awaiting compensation

A report published last week by the Treasury Select Committee concluded that thousands of families suffered as a result of the Revenue's struggles to cope with the administration of the new tax credit.

If someone applied last week and we made a lot of mistakes it would be irrelevant that they had only submitted the form recently
Inland Revenue spokesman

According to the latest Revenue figures, from 7 July, there are 186,000 claims outstanding, and half of these are older applications with outstanding queries.

The recent select committee report said people who had incurred costs as a result of delays or errors due to the Revenue in paying tax credits should be "compensated swiftly and in full".

There had been some concern that people who missed the original 31 January deadline would not get compensation, but the Revenue said each case would be judged on its own merits.

"If someone applied last week and we made a lot of mistakes it would be irrelevant that they had only submitted the form recently," said a spokesman.

Scheme explained

The Revenue scheme, known as COP1, offers compensation for people who have suffered financial loss, such as bank charges, or extra telephone costs, incurred as a result of Revenue errors.

Three grounds for compensation
Claiming back costs
Compensation for worry and distress
Further mistakes in dealing with your complaint

The Revenue can also offer compensation for worry and distress if it can be proved that mistakes and delays have caused a "great deal of inconvenience or irritation".

In addition, it could pay out if it handled a complaint badly or took an unreasonable time to deal with it.

Payments tend to range between 25 and 500 in these two categories.

Of the 400 judgements waiting to be sent out, payments averaged 70 each, the Revenue said.

The Revenue said it expected to pay out compensation to 5,600 of the 13,000 complaints it has received so far, and was prioritising cases where applicants had not yet received any tax credit money.

A spokesman said time taken to deal with complaints varied widely, but some could take days to resolve.

"It is an awful lot of complaints to have in one office. We are looking to increase resources so the teams can get through the backlog," said a spokesman.

Complaints procedure

People who feel they have lost out must first complain to the Revenue which will then decide to compensate, or reject the claim.

But if they make a complaint through their MP, their case is automatically investigated, under the compensation scheme.

If customers do not agree with the outcome, or do not feel the compensation reflects the claim, they can then go to the Adjudicator's Office, the Revenue's ombudsman.

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