Tax credit system 'too complex'

Six million families are receiving tax credits

Tax credits meant to help families and lone parents on low incomes have been branded "too complicated" and "confused" by a leading charity.

The Child Poverty Action Group (CPAG) report pointed to initial errors leading to widespread wrong payments.

The problems caused were compounded by the Inland Revenue pursuing people who had been overpaid, CPAG said.

The charity acknowledged that credit was helping many low-income families, but said a simpler system was needed.

Hardship

Up to six million UK families are receiving tax credits.

The system is very complicated and it is far from easy to make a claim Kate Green, CPAG chief executive

The uptake of tax credits has been a success for the government, but last year's launch was condemned by unions and charities as chaotic.

Computer bungles and administrative errors left families in the lurch.

Many families faced initial delays securing their tax credit, while others were overpaid.

The resulting demands from the Inland Revenue for the return of overpayments caused hardship, CPAG said.

"Claimants are being paid incorrect amounts through no fault of their own - and are then having money taken off them, leaving them and their children with very little to live on," said Kate Green, CPAG's chief executive.

Riddled

At the peak of the launch problems, two million attempted calls were being made to the tax credit helpline every day.

After last year's problems, the Revenue boosted the number of helpline staff.

Two new call centres, with an extra 500 staff apiece, are now working on the tax credit frontline.

Nevertheless, the CPAG report concluded that the tax credit system remained "riddled with problems".

"The system is very complicated and it is far from easy to make a claim," Ms Green said.

"In addition, there is evidence that wrong awards are still being made."

In response, an Inland Revenue spokesman told BBC News Online that tax credits were a success.

"We put any problems right within a number of weeks of the introduction of these tax credits and they have been effectively delivering vital support to families for over a year."

"We do not accept the criticism that it is far from easy to make a claim."