Press Notice 18, Session 2005-06

PASC slams Revenue’s failure to look after its Tax Credits customers

The Public Administration Select Committee has expressed its “deep concern” about Tax Credits.  It found that HM Revenue and Customs (HMRC) has failed to take into account the needs of recipients previously on benefits.  For them, the Committee says “regular and reliable payment is not a desirable budgeting convenience but a real necessity.”

In its report, which follows the Ombudsman’s own findings of maladministration, the Committee found it deeply worrying that the scheme did not have adequate case-handling capacity - essential for public services involving transactions between a department and the general public.

The Committee also found that the IT system which was supposed to enable more efficient delivery was in fact both the cause of major problems with the Scheme and has been a barrier to resolving them easily. This was the case, for example, with the introduction of a pause between notification of an overpayment and starting recovery, the absence of which the Ombudsman found fettered HMRC’s own discretion and was at the heart of the maladministration.

Dr Tony Wright, Chairman of the Committee, said:

“The Ombudsman’s report illustrates in stark terms the bad administrative practice which has marred an otherwise well-intentioned government scheme. Although a start has already been made, we must concur with the Ombudsman that resolving these problems will be a long haul. We will monitor the Revenue’s progress in implementing the Ombudsman’s recommendations closely. We trust too that other government departments will pause and think carefully about the lessons to be learned from this case - and act on them”.

Notes to editors:

On 21 June 2005 the Parliamentary Commissioner for Administration (the Ombudsman) published her report ‘Tax Credits: Putting Things Right’ (Third Report of the Parliamentary Commissioner for Administration, Session 2005-06: Tax Credits: Putting Things Right, HC 124) following a rising number of complaints to the Ombudsman about the Tax Credit Scheme since its introduction. The report concluded that, while the new tax credits system was not in general disarray, the cases investigated raised concerns about the treatment and recovery of overpayments. It was also clear that a “significant number of families were affected and that the level of financial hardship and distress being caused to some was considerable”. The report urged prompt action on the part of the Revenue and made twelve specific recommendations for improvement.

On 20 October 2005 the Committee invited the Ombudsman and HM Revenue and Customs to give evidence about the implementation of the recommendations contained in that Report.


The Committee was nominated on 13 July 2005. Its terms of reference are to examine the reports of the Parliamentary and Health Service Ombudsmen, and to consider matters relating to the quality and standards of administration provided by Civil Service departments, and other matters relating to the Civil Service. The Membership of the Committee is as follows:

Tony Wright (Chairman) (Lab) (Cannock Chase), Mr David Burrowes (Con) (Enfield, Southgate), Paul Flynn (Lab) (Newport West), Julia Goldsworthy (Lib Dem) (Falmouth & Camborne), David Heyes (Lab) (Ashton under Lyne), Kelvin Hopkins (Lab) (Luton North), Mr Ian Liddell-Grainger (Con) (Bridgewater), Julie Morgan (Lab) (Cardiff North), Mr Gordon Prentice (Lab) (Pendle), Grant Shapps (Con) (Welwyn Hatfield), Jenny Willott (Lib Dem) (Cardiff Central)

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