[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Thursday, 17 April, 2003, 10:27 GMT 11:27 UK
Six Forum: Tax Credits

John Whiting, Tax Partner at Pricewaterhouse Coopers answered your questions in a LIVE forum for the BBC's Six O'clock news, presented by Manisha Tank.

  • Click here to read the transcript


    Nine out of 10 families with children are supposed to benefit from the new flagship tax credits.

    But there appears to be a backlog at the Inland Revenue, which is causing worry for many parents around the country

    The Revenue has dismissed claims that the system is in chaos, but BBC News Online has been inundated with e-mails from families who say they are facing hardship from delays in processing their payments.

    Will you be out of pocket? What can you do? Is the system failing?



    Transcript


    Manisha Tank:

    Hello and welcome to the Six Forum, I'm Manisha Tank. Gordon Brown's new tax credit system for working families appears to be falling apart. Nine out of ten families with children are supposed to benefit from the new flagship tax credits. But there appears to be a backlog at the Inland Revenue and parents around the country are having a very tough time getting their money, or indeed any help from the departments concerned.

    To address your questions and comments I have with me tax expert, John Whiting, he's from Pricewaterhouse Coopers. Lots of questions on this subject. It seems that people just aren't getting the information they need where it's supposed to be.

    We'll begin with a three-in-one question from Joanne, UK: My tax credit used to be paid through my salary, why was it changed? What was the purpose? And for whose benefit?


    John Whiting:

    This sounds like the big question and could take the whole programme. Why was it changed? There's an element of evolution here. What the Government has tried to do is target more help at the lower paid, so not just for people with families but low-paid workers and also more help for those with children. So what we've done is we've thrown out working families' tax credit and children's tax credit, which are relatively new and all paid through the salary, and we've brought in, as of allegedly about 10 days ago, the working tax credit and the child tax credit - it sounds very similar but just a tad different. Working tax credit paid through salary, child tax credit paid to the main carer and potentially to the bank account.

    So if nothing else, many people who got benefits - and this may be the point of the first caller's question - have seen the benefit that they get through their salary go down but hopefully something has gone up somewhere else and fingers crossed, if it works, the vast majority are better off.


    Manisha Tank:

    Your saying fingers crossed - that doesn't give me a great deal of hope. This is exactly where the confusion is coming from - nobody knows where the money is supposed to be as opposed to where it was before.

    Dave Hignell, England asks: Can you please tell me the criteria you have to meet to claim the working tax credit?


    John Whiting:

    Fundamentally you are working 16 hours a week - it can be as simple as that. So it can be, and mostly is, somebody who's employed - on the other hand it could be part-time, they could be self-employed. If you are in that then you are on the register and then you get various components - and this again causes the confusion - you get a certain amount for working, if you're part of a couple then you can get a bit more, if you work more than 30 hours you can get a bit more. If you have childcare costs to enable you to go out and work, then you get some more. That's all aggregated, then depending on your income level, it's taken away because as your income rises, surprise, surprise, your benefit goes down. So it's quite a complex system and how do you get it? Well of course apply on a form to the Inland Revenue, they stick it into their great computer and it comes out and says, you are due 55pence or whatever but hopefully a bit more.


    Manisha Tank:

    Part of all of that - the complexity of forms and all the rest of it has been a bit of a problem to a lot of the people who've been writing in and it wasn't so long ago we had a totally different system. So we're just trying to get used to that and then we go onto another one.

    Mike Evans, Great Yarmouth: My tax code has changed - so my salary has dropped by 100 per month, and no money has been paid into my wife's account for the past two weeks. How can this happen?


    John Whiting:

    In theory of course, there's one or two situations we might just have that could explain this - it depends on your income level because there are situations where say each half had 30,000 a year then they would have got the old children's tax credit and they won't get the new one. So there are very few situations where you could lose.

    But in general, the sort of the thing that Mike is getting, what it should be is that he would have had quite a lot of child element under the old working families' tax credit - that payment is now going to the main carer - presumably his wife and it should end up in her bank account. Now in theory it should work - clearly from what he's saying to us, it isn't working - one trite answer, but all you can do is try and get in touch with the Revenue and say, why the disconnect. Now as I say, there are one or two situations where, because of income levels, because this new system is more on joint incomes, then it's just possible that's why it has dropped. But for the majority of people, that tank of water goes down, that tank of water fills up but it's somebody else's tank, if you see what I mean.


    Manisha Tank:

    So when the money comes through - and this is part of the problem, it's not coming through - his wife may find that that 100 is in her account.


    John Whiting:

    It does balance out hopefully.


    Manisha Tank:

    But we're obviously working on a delay at the Inland Revenue which is part of the problem. Nicola Blundell, UK: I'm at my wits end, I can't pay my mortgage and will probably have to give up work shortly if I can't pay my childminder. I'm sure there are plenty of other people in my situation. Is the Government prepared to help us?

    Now this is basically a question about - what do I do now, I can't give up my job.


    John Whiting:

    Nicola is exactly the person whom these credits are aimed at. She sounds as if she's a lone parent, so is exactly the sort of person that Gordon Brown is trying to give help to so she can get out to work. The child tax credit, the working tax credit, it does have an element for childcare. So all I can say is that - let's make sure Nicola, as I'm sure you've have, you've filled in your forms, you've made your claim - if that isn't coming through then clearly check with Revenue etc. etc.

    It should be working, if it isn't - if they're saying, you're not entitled - well you must earning more than you thought you were perhaps. If on the other hand, they're just taking a delay in processing - well jolly them along, try and pressurise them, try and get them to see that this is urgent. If all else fails then clearly - and one or two of the sob stories we've got, the hard cases that we've seen people write in about - it may be having to go round to the Benefits Agency and say, help give me some emergency support to tide me over.


    Manisha Tank:

    Rachel, Bournemouth, UK: Is it true that only those who have already got their notification can receive emergency payments from their local tax office? If so, what can I do as I am still waiting for notification?

    And you said, jolly them along. I know that you know a lot about the Inland Revenue, how on earth do you jolly along the Inland Revenue?


    John Whiting:

    It's very difficult, as you say. Just to go through the process, of course, people are registering and then they get the acknowledgement, then they'll get something that says check it, then you check it and then finally they'll get the bit of paper that says, you're entitled and then of course the thing ought to flow. So that's the sort of thing Rachel ideally would have to possibly prove that she should be getting some money and maybe persuade the Benefits Agency or somebody to unlock a bit of money.

    To jolly them along - one is a bit helpless here in terms of the face of an enormous bureaucracy but the Revenue genuinely are trying to help - I don't know why I'm saying this, I'm not from the Revenue - but they're trying to help. So all you can do is try and go along, literally - obviously try phoning them but if that doesn't work on the help lines because they're busy too often, well go around to the local office and make a nuisance of yourself and say come on I need my money, unlock it - you've got the money - I need it, I'm entitled and that really is the pragmatic advice I can give. But then again for somebody who is trying to work, it's not ideal to have to go round and thump the table at the Inland Revenue.


    Manisha Tank:

    Absolutely, it becomes even more difficult. David Weeks, Fleet, Hants: The Treasury says that no one will be out of pocket but is there a case to be made for the Treasury to pay interest for late payment of benefit?

    In principle a good idea - the likelihood of it happening?


    John Whiting:

    Small - there's no actual provision in this for late payment. Where you could get it, they will potentially do a little supplement if there's clearly been a major administrative cock up. But just late payment, they aren't anticipating putting interest on because of course that shouldn't happen, should it. I would go wholly along with David, if there are genuine delays then much as with tax, if you or I are late paying our tax, then we have to pay interest. So if they're late paying back tax, normally it carries interest. So I think there should be some sort of supplement, although that doesn't help the person who frankly needs the 100 now rather than a 102 in a few weeks' time.


    Manisha Tank:

    And indeed you think that we should have interest on the benefits that we're due and I can think that but will the Government, that's a different question.


    John Whiting:

    I think what we would have to do is to try and get the Government - because really that's where it comes from, the Revenue are only administering the system the Government have laid down - I think we need to get the Government - you heard a clip from Ruth Kelly in the main programme - get her to concede that there are delays and to say we will try and compensate people who are really suffering. I know they're saying nobody will suffer in the end, you will get your money in the end. That's not good enough for some people who need that money now.


    Manisha Tank:

    Well here's someone who needed the money now. John Swan, Jedburgh: I have had to take out a crisis loan with the Social Security to cover the gap between the last payment of WFTC and the new one beginning. What I want to know is who is going to repay this loan which I feel would not have been needed had the new WFTC been run properly in the first place?

    This is a very similar question, who is responsible? Where do you lay the blame and who pays up?


    John Whiting:

    There is clearly a provision to go through to the Revenue and say there is maladministration here, your fault, you cocked up, you owe me something and the Revenue does have a fairly well-defined process of appeals right up to somebody called the Revenue Adjudicator, Dame Barbara Mills, who looks at bad cases of maladministration.

    So if it's extreme, there is scope for appealing and trying to get the gap filled. Whether just a delay in paying the tax credit will get there, I don't know, which is why I think we need to just make as much noise as we can for this sort of situation to say people are suffering. What I would hope is that he will get the money to plug the gap because if he has to take out an emergency loan, well obviously the money should come in from the benefits side of it, from the Inland Revenue, and that should make up and let's hope that it does match up at the end of the day.


    Manisha Tank:

    Just finally, we've got a great and very annoying scenario that's been sent in from Arthur White, Scotland: I have 2 children, who I see at the weekends. I applied for Working Tax Credit, and was awarded 530 per annum. Yesterday I called to see why it was not credited into my bank account, only to be told that I was not a responsible parent. If that's the case, should I cancel my monthly payments to the Child Support Agency?


    John Whiting:

    That sounds wonderful. I'm quite sure Arthur is a very responsible parent. I do wonder if we've got a slight mix - and this is the trouble, it's semantics - between the working tax credit, which would of course go to him if he's relatively low paid and the child tax credit which goes to the main carer, to the responsible parent. I presume from the tone of his question, he's separated and it may well be that that award that he's been told about - that he will have had to get together with his ex-wife or his separated wife to fill in the forms - and it's possible that award, he's been told about it, but it's going to his wife. He's looking for it in his bank account and there's nothing there because it has gone to her. He needs just to be clear and check up whether it has gone to his ex-wife, if it hasn't then where is it - back to some of the earlier questions we've had.


    Manisha Tank:

    So lots of investigations for him do there. Well thank you for answering all those questions and those comments.


    John Whiting:

    It's a pleasure, I am sorry we won't actually have got money into people's hands but hopefully we've given them hope because there is a lot of money there and it's worth persevering for. There's 6 billion there.


    Manisha Tank:

    Absolutely, and they should certainly be assertive. And in fact Jeremy Sharples, Rossendale CAB, has sent in a text message with some advice. He says, the Citizens Advice Bureau is a useful source of help for people with difficulties claiming. So get onto them or otherwise you can go and bang on the office of your local Inland Revenue office.

    That's it, you've been watching the Six Forum, we hope we've been of some help. Thanks for watching, goodbye.




  • SEE ALSO:
    Revenue denies tax credits 'chaos'
    16 Apr 03  |  Business
    Tax credit delay infuriates parent
    15 Apr 03  |  Business
    Problems in getting hold of tax credits
    14 Apr 03  |  Working Lunch
    Tax Credits: Emergency payments
    12 Apr 03  |  Moneybox
    Concern at Tax Credit delays
    22 Mar 03  |  Moneybox


    RELATED BBCi LINKS:

    RELATED INTERNET LINKS:
    The BBC is not responsible for the content of external internet sites


    PRODUCTS AND SERVICES

    News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East | South Asia
    UK | Business | Entertainment | Science/Nature | Technology | Health
    Have Your Say | In Pictures | Week at a Glance | Country Profiles | In Depth | Programmes
    Americas Africa Europe Middle East South Asia Asia Pacific