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Last Updated: Wednesday, 30 August 2006, 15:34 GMT 16:34 UK
Vital tax credit deadline looms
HMRC tax credits web site
The HMRC is keen to get its message across
Hundreds of thousands of families may lose their right to tax credits if they fail to get their renewal forms in by 31 August.

People who claimed tax credits in the last financial year were sent annual review packs between April and June.

The forms have to be filled in and returned to HM Revenue & Customs (HMRC) if extra information is requested.

Last year, 200,000 out of six million claimants failed to do this on time and saw their claims lapse.

People who claimed last year have been receiving interim payments since April based on their previous claim while HMRC waits to receive their renewal forms.

"With one week to go, we were down to less than 1 in 10 households where a return was outstanding," said an HMRC spokeswoman.

"The rate of returns to date are better than last year. Clearly we still expect last minute returns," she added.

Earlier deadline

It's vital that people check they are getting what they are entitled to and report any changes to their circumstances
Kate Green, Child Poverty Action Group

There are still roughly six million claimants and if any of them fail to meet this week's deadline, their interim payments will stop.

The deadline has been brought forward by a month compared with last year, a change which has worried the Child Poverty Action Group (CPAG).

"We're concerned that families may have forgotten or not yet got round to filling in their renewal form," said Kate Green, chief executive of the CPAG.

"It's also vital that people check they are getting what they are entitled to and report any changes to their circumstances.

"We would be extremely concerned if the earlier cut-off point means that families miss out on what's rightfully theirs and so we will be keeping a close eye on this year's renewal figures," she added.

Some claimants have been told they have to do nothing unless they know that their circumstances have changed.

But many others will have to complete the forms, sign them, and send them back.

If the 31 August deadline is missed, the award for tax credits is cancelled and any provisional payments will have to be paid back.

Claimants who do still want to get tax credits will then have to start all over again.

There is one last chance, however. The HMRC will reinstate the award if officials are contacted within 30 days of its lapsing.

After that deadline, the old claim will be reinstated only if the claimant can come up with a good excuse.

Faulty system

There are two types of tax credit aimed at keeping people with jobs out of poverty.

Child tax credit is paid to families who have children, regardless of whether the parents are working or not.

The working tax credit pays money to people on low incomes, even if they have no children.

But since the system was established in 2003, it has been plagued by computer errors, administrative confusion, huge overpayments to claimants, repeated attempts at organised fraud and much public controversy.

Last December, the online portal through which people could make claims was shut down after evidence emerged of widespread attacks by organised criminals. The portal remains closed.

HMRC revealed in July that fraudsters had tried to steal more than half a billion pounds from the tax credit system in the last financial year.

More recently, the BBC discovered that HMRC had turned down about two-thirds of those who asked for their tax credit overpayments to be written off because of administrative error.

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