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LITRG are concerned that HMRC use such misleading marketing messages to increase the take-up of Tax Credits that many who might qualify, including HMRC's more vulnerable customers, are put off.

Background

HM Revenue & Customs (HMRC) are tasked with increasing the take-up of Tax Credits. While HMRC's marketing efforts do result in many taking up Tax Credits who might not otherwise have done so, there are still many falling through the net.

HMRC repeatedly simplify their marketing of Tax Credits to such an extent as to seriously mislead the casual reader. Take, for example, the occasion last October when HMRC launched their campaign to reach workers without children, upon which we commented - see Bad Start for HMRC's Push to Increase Tax Credits Take-Up.

In their latest campaign which is targeted at employers, HMRC have once again so simplified the messages as to create a false impression.

Left Out Again

The Tax Credits regime cannot be explained with a few simple income figures. It is highly complex because it aims to be flexible and reactive to individual circumstances.

So when marketing people fix upon simple messages in order to capture the audience, essential details are left out, and classes of people who are entitled – and should be encouraged to claim – do not receive a mention.

The latest unfortunate campaign, in a long series, is the attempt to sell Working Tax Credit to employers for onward promotion to their employees. This is included in HMRCs February 2010 Employer Bulletin and is commendable in concept, but not in the detail. The bold text that follows represents quotes from the Bulletin with our commentary below:

1. Your Employees could Claim [Working Tax Credit] if they:

Quoting such precise figures is highly misleading and will persuade many people that they are not entitled to claim.

• First, Tax Credits entitlement is normally based on income for the previous tax year. So you could be earning well above those figures now and still be entitled to Working Tax Credit in the current tax year because your income for last year was below £13,190 or £17,956.
• Secondly, if you are a single employee with a disability, the comparatively generous extra support you are entitled to through Tax Credits could push your income levels close to £20,000 a year (up to £22,500 if you are severely disabled) before your entitlement ceases. The income level for a couple where one or both partners are disabled can be even higher.

2. To Give you an Example of what They could be Claiming – a Single Person Earning £10,000 in 2009/10 could be Entitled to £1,270 per year…

This example merely reinforces the misinformation. If the single person was earning £10,000 as a trainee in 2008/09, but has now received promotion and is earning £18,000 in 2009/10, they are still entitled to receive £1,270 a year.

Also, even if this single person did earn £10,000 in 2009/10, if they were paid less in 2008/09 they might in fact be entitled to more than £1,270 Working Tax Credit now.
 
Another incentive to claim for the first time is the three-month backdating allowed, so that you get Tax Credits for up to three months before you claim, so long as you met the criteria during that time.

This is another benfit that HMRC could promote, but do not. See The Backdating of Claims - Another Tax Credits Scandal?

3.  …Those Over 50 Returning to Work after a Period of Being on Benefits, may also be entitled...

It is actually those over 49 (or to put it another way, using the same annotation as elsewhere in the article, those aged 50 or over) who are entitled under these provisions.

Let This be the Last Time

We have raised these issues for the last three years and each time HMRC pat us on the head and say that we do not understand marketing. That may be so, but we see too many people who do not claim Tax Credits when they are entitled to do so. If HMRC are going to be simplistic in their marketing then we want them to invite as many people as possible to test whether they are entitled or not. Even if they do not qualify, they may have learned something in the process.

We understand that employers are going to be invited to acquire posters to put up for their employees. If those posters might mislead their employees, they might like to think again.