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The UK’s tax credits system is continuing to fail because the Government has not overhauled it in a timely and effective way, according to the Association of Chartered Certified Accountants (ACCA).

In response to the Public Accounts Committee’s fourth report into tax credits,  the ACCA has expressed alarm at the report’s findings that overpayments, fraud and the complicated administrative procedures, which have caused the tax credits system so many problems in the past, are still widespread.

The Association is also concerned that HMRC does not have up to date information about levels of claimant error and fraud in tax credits.

Chas Roy-Chowdhury, head of taxation at ACCA, says:

“HMRC’s lack of timely and relevant information about tax credit overpayments is very disappointing. It means HMRC cannot assess its effectiveness in combating tax credit fraud and errors. The UK taxpayer has a right to know how much this system is costing them. There is a real sense of déjà vu with this report – a year ago, ACCA called for better planning, co-ordination and management to tackle overpayment and fraud in the UK’s tax system. And we find ourselves saying the very same today [9 May 2007]."

“This recurring overpayment problem - the ‘pay now and check later’ approach – is a major hurdle for HMRC to clear. But most importantly it is a source of frustration and stress for families who mistakenly fall foul of overpayments.”

According to the Public Accounts Committee report, administrative errors made by the Department continue to generate incorrect payments but it is not known how much is involved. The ACCA believes that this lack of information and lack of accountability is shocking and is calling for the Public Accounts Committee’s recommendations to be carried out urgently, and in full.

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Association of Chartered Certified Accountants