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back to article Failed tax system still causing grief

The Public Accounts Committee has found the government's tax system overpaid tax credits by £7.3bn in the first four years of the scheme and is still clocking up £1bn a year in overpayments. Her Majesty's Revenue and Customs is trying to recover some £4.3bn of that from some of the most vulnerable families in the country. Delays …

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Anonymous Coward

heh

The government can kill hundreds of people in poorly maintained and staffed hospitals, it can leave hundreds in poverty through it's catacalysmic database ---- ups, and it can spy on your privilaged discussions with impunity and nothing happens it's all dandy. While if you look at some cartoon sex of characters who may according to 13 idiots on a jury seem under 18 or watch some extreme porn, you get to go to go directly to the sex offenders register and, the end of your social and working life. It'd be funny if it weren't so sad.

What a wonderful nation we live in.

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Silver badge

An Answer?

How about making the whole system a lot simpler. Gordon Brown took great delight in making things more complicated and we're footing the bill.

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Unhappy

Political failure not IT...

The overpayments are largely down to the incredibly overcomplicated methodology used to work out tax credits due. That's the fault of ministers, not the IT people. I'm sure the programmers did their best to make some sense of it.

Surely adding a suitable amount to the tax free allowance for each child would have achieved the same thing without the need for thousands of civil servants and massive IT contracts!

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Alert

If they can calculate overpay. . .

Then why not use whatever method they've used to calculate the overpayment to calculate the actual payment and get it right?

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Flame

A great steaming pile of . ...

I have personal experience of this 'system'. The incompetence and inneficiency of the ting beggars belief. for a while my family and I were entitled to these benefits but, despite, constantly updating them on our circumstances they managed to over pay us by some, as yet unspecified, amount. I say unspecified but in fact it has been specified several times and always differently.

Eventually my other half wrote to them asking for a clear breakdown of what we owed and how it had been calculated. That must have been four years ago. We have been threatened with court action and the threat withdrawn when we reminded them that we were awaiting the results of their investigations and then threatened again once they had forgotten the reminders. There are offices at ooposite ends of the country that will not/cannot speak to each other so we have to act as go-betweens for them!! We raised an appeal, which they lost (the recorded delivery documents that is - not the case) and raised another appeal and the whole sorry thing is still creeping its inexorable way until we claim compensation for the whole "stress, pain, humiliation" that seems to be modern societies way of dealing with stuff.

Fortunately for us the amounts in question (whichever one finally turns out to be correct) are not serous enough to inconvenience us but I'll be bu**ered if I'm going to pay until they can provide some consistent rationale for the final bill and a guarantee that we will never hear from them again.

We also know several other people that have been seriously screwed over by this whole fiasco of a system and look forward to the day it finally disappears off into the sunset.

Whose idea was it again?

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Stop

Where does the buck stop?

Q. How have things improved since Capgemini took over 5 years ago? A. Not at all. Tells you all you need to know....

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Flame

wankers

I am coaught up in this and they are asking for £4000 back because i was 7 days late in stating i had a new job

At the time they didnt really care said no its fine and carried on paying me

At the end of the year they then asked for all the money back. when i said im sorry what !! why not just the difference owed they said i can only claim back 3 months.

But they are able to claim back a full year or probably longer.

I would happily pay the difference if they tell me what it is. but i refuse to pay a full year because they have a unbeleivably crap accounting system.

I now no longer claim tax credits although i shoud be getting shit loads because i am the only one working in my family of 4 and i dont earn alot either.

So i am now stuck at the edge of my overdraft because i cannot claim due to fear of getting screwed by the goverment. Same goes for council tax help and rent help.

but yes i am contesting this but i have heard nothing for almost a year now because of a high case load .... just hope it takes another 6 year and i can say what £4000

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Anonymous Coward

Forget EDS - Its now Cap Gemini's time

Everyone blamed EDS but it wasnt them - it was the Inland Revenue meddlers who caused the problem. Its now 5 years since EDS lost this deal, 5 years of Cap managing the developement and live operations - have they fixed it NO!. They could have re-written this from the ground up but didnt. I understand the first couple of years of the Cap contract Cap did what EDS didnt do... everytime IR then HMRC asked for somethign to be done they gave HMRC the bill first. This looks like another contract that should go tits up - but wont - as HMRC cant admit they got a shitter deal with Cap than they had with EDS.

So stop knocking EDS over this contract and system. Cap have had control of it for long enough to have fixed it. Is it fixable though?

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Anonymous Coward

HMRC pigs

Her Majesty's Revenue and Customs are the most inbred, worthless pieces of human excrement on the planet. What they do to poor people by overcharging them when they desire or making mistakes and then using intimidation and legal action to recover is simply appalling.

Its not like anyone has intentionally taken money from HMRC, no-one even understands how they calculate tax's or credits etc.

If no-win-no-fee is the way to go... then lets ALL do it... they've been stealing from us for far too long

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Solution

The solution is root and branch reform of the tax system.

The whole concept of tax credits -- charge people too much money and pay it back later -- is fundamantally broken.

I suggest replacing the present income tax system with its archaic bands (designed to make it feasible to work out everyone's taxes in the days before computers; the real bottleneck in the process, though, was the stupid pounds/shillings/pence system that persisted far too long) and personal allowances by a simple quadratic regression. That is, your tax y would be worked out from your salary x according to an equation of the form

y = a * x ** 2 + b * x + c

where a, b and c are constants determined from time to time by the Government.

The squared term removes the need for banding and so eliminates a popular tax avoidance strategy. The proportional term would dominate, of course. To provide for individual allowances, c would be made negative and if y < 0, then you don't pay any tax.

Now we have computers, it's not as impossible as it might have seemed in the early days. Actually, as long as you're using decimal currency, it's even doable without a computer.

I further suggest a phased introduction over 5 years; with everyone paying 80% of their taxes worked out according to the "old-style" method and 20% of their taxes worked out according to the "new-style" method in the first year, 60% + 40% the second year, &c. This will mitigate the effects of a drastic step-change in the tax regime.

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@ Political failure not IT...

Of course tax allowances for each child (plus a couples allowance) with income supplement for the poor are the way to go, the way it used to be, and the way its still done in most of the rest of the world. But Brown wants as many people as possible on means-tested benefits so that he can control their income, and to make them more likely to vote Labour as the party believed to be most likely to increase benefits.

If this system had been administered by the DSS they have the business knowledge to administer benefits and know that if you overpay a benefit it causes hardship and in any case you have little chance of getting it back. So they put effort into upfront validation and fraud management. But because Brown wanted to disguise this as something other than a means tested benefit, for political reasons, it was given to HMRC (Inland Revenue as was) who created it and run it like income tax, with few checks up front and validation later. This has had the disastrous consequences of massive fraud, massive errors, a huge bureaucracy struggling to manage it, and a department totally unmoved by the social hardship caused by clawed back overpayments.

So lets be clear, it is not Cap or EDS to blame, it is not even HMRC, it is Gordon Brown and Labour's social engineering that is 100% responsible for this farce-cum-tragedy.

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Unhappy

@Lionel Baden

Don't think that 6 years will make it go away. The Revenue have 6 years to identify unpaid tax. Once they have identified it, they can chase you to the grave. I would guess that the same is true of overpaid tax credits.

I knew of one person who made a serious tax mistake that nearly bankrupted him (he was a self employed lorry driver) in the 70's, and he died a few years ago still owing the Revenue money.

He often said that it would have been better if he had of gone personally bankrupt, as he would have been shot of it after 5 years.

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DR

on average 770 a year over paid

so I guess that means that some will have been paid right, perhaps some over paid by only a littl (say £50 per year). others over paid by thousands.

really can it possibly be that difficult?

IMO surely the best thing to do is purposefully calculate lean, that way you never have to deal with an underpayment, people in the worst situation then don't have to worry about loosing more money next year because not only have their payments been reduced by ~£50 a month, but they are also paying back ~£50 per month, (so net income is down by over £100)...

anyway.. calculate the payments a little under, then come November press the big button marked GO.

and anyone who is paid right gets to stick as they are, anyone who was underpaid get a nice payment just on Christmas to ease the burden at arguable the tightest time of year.

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