'Shambles' of tax credit system

Child and work tax credits have been cut for some people

The National Association of Citizens' Advice Bureaux has warned that thousands of families are having child or work tax credits cut because the Inland Revenue says it overpaid them. Mother-of-three Diane Peckham told BBC News about her tax credit woes.

The tax credit system is a "complete shambles" says one mother who has had her credit cut.

Mother-of-three Diane Peckham was eager to apply for the child tax credit when it was introduced in spring.

She received £93 a week in credit - almost half her weekly income - but in September she was told she had been overpaid £800.

Her credit was summarily cut by £25, forcing her to apply for a hardship payment from the Inland Revenue.

"It's the children who are losing out because we don't have money to pay for activities, extra snacks at the supermarket or luxuries," she told BBC News.

I feel really despondent about the whole tax credit system Diane Peckham Families suffer tax benefits cut

She said: "We are back now to the very bare basics."

Hers is one of thousands of families who have had child or work tax credits cut because the Inland Revenue says it overpaid them.

The poorest of the families will be entitled to hardship payments.

When Ms Peckham applied for the hardship payment, Inland Revenue said it would take two to three days.

It eventually took three months and left her £10 a week worse off.

An advisor from the local housing association is helping Ms Peckham appeal against the overpayment decision.

Ms Peckham longs for the good old days of social security benefits.

Christmas gloom

She said: "The whole system is a complete and utter shambles.

"I really wish I could just go back to being on my income support and knowing where we were each week and not having desperately the concern that I now have on a weekly basis".

With Christmas approaching, Ms Peckham is less keen about celebrating than usual.

"I feel really despondent about the whole tax credit system.

"I don't like Christmas at the best of times and this year it is actually quite hard to drum up any enthusiasm for it at all"

Protest

The National Association of Citizens' Advice Bureaux has written to the government to protest at the cuts, and to demand swift action to protect poor families.

It says many families have had benefits reduced by up to a third and such cuts without notice are unreasonable.

The government says the system has been a huge success with six million families benefiting after just nine months

The Treasury said payments would change if families' circumstances altered, such as a pay rise or children leaving home.

The Child Tax Credit and Working Tax Credit were introduced in April 2003.

They replaced the old-style Working Families' Tax Credit and the Disabled Person's Tax Credit.