I’m sitting on a bed covered in an overwhelming amount of correspondence between me, Working Tax Credits Complaints Office, Lynne Featherstone MP, Sarah Newton MP, The Adjudicator’s Office and HMRC; correspondence which stretches back to February 2009.
Paula Dean at Tax Credits Casualties has sent me a costings spreadsheet, which shows estimates made by the National Audit Office in 2005 to calculate the cost of an Overpayment Demand. There is the National Service Delivery Cost Model of 2008.
The cost to HMRC calculated for a standard appeal against a demand for a ‘non-fraudulent overpayment’ comes to £1,880. This is a standard case, whereas the one I experienced went all the way to the Adjudicator’s Office in 2012, when they fobbed me off and I had to start from the beginning again in 2013.
The Costings spreadsheet I was sent by Tax Credit Casualties shows the following figures:
A letter £3.77
A phone call £1.08
An email £1.08
An appeal, ombudsman, Adjudicator or complaints officer intervention: £155.
Based on the occurrence and cost of the various types of correspondence, of which there were 97 communications made, the total cost for this process was £1,880.11.
For the purpose of their findings, assumptions were made. These included:
* Costs quoted do not reflect the full officer time required by HMRC, the Adjudicator’s and Ombudsman’s offices in investigating overpayments and the reasons that lie behind these. Neither are they reflective of the time spent on cases by MPs, many of whom advice that they spend up to 75% of their time on constituents’ tax credit cases.
* it is generally accepted that the costings quoted in the NSD cost model are considerably less than those expected to be reported by local government; indeed Tameside Metropolitan Council have already reported costs of £15.50 for face to face and £1.59 telephony.
My own dispute was finally resolved in mid 2013 and I was given £50 compensation for stress and £10 admin costs. Below, I have made my own calculations on how much it cost the state for Working Tax Credits to chase me for £1,453.
For those who are not familiar with Working Tax Credits or their Overpayment system, here’s a skeletal guide to what you would have expected:
* You make a claim and fill out a form.
* The amount you can claim for a year is estimated at the beginning. If your year turns out to be dramatically different, it is likely to result in an adjustment.
* No evidence of your ‘personal circumstances’ would be required. The payment you receive is totally based on hearsay.
* Pieces of information appear on this form with vague statements such as:
“Your tax credits are based on your personal circumstance. Please tell us if anything is wrong, missing or incomplete because if you receive more money than your are not entitled to , you will have to pay the money back.”
It appears to be deceptively easy. A seasoned fraudster, not a genuinely hard-working person juggling aspects of life, might already know at this point that there are hidden traps to catch you out – mostly vague and incomprehensible wording – and already be reaching for the Code of Practice to study it carefully before claiming.
HOW DID THEY ADVISE YOU TO CHALLENGE A DECISION?
This is the process you are advised to follow, if you want to dispute a ‘recoverable’ overpayment.
Fill in a form (TC846) and send it off.
Get a response.
Only reply with ‘new evidence.’ (Though any I sent was ‘dismissed because I hadn’t told them at the time.’)
Visit the Citizens’ Advice Bureau (CAB).
Take any action possible as advised by the CAB.
Contact your MP and get them to contact HMRC on your behalf.
Contact the Adjudicator’s Office.
There may be an appeal in court.
They investigate and write back with their conclusion.
I have made the following calculations and estimates on how much it might have cost for HMRC to try to recover £1,453 from me over a four year period:
The issue of 15 demand letters @ £10 each: £150
HMRC complaints officers’ time with me on phone @ £10 an hour, for 40 hours (over all estimated time on phone calls spent dealing with my case over 4 years). £400.
Citizen’s Advice Bureau times and costs (Haringey and Falmouth) £40.
MP’s time based on salary estimate of £31.25 an hour. £625.
The time taken and letter writing for a senior complaints official to write to me and to an MP a total of 10 times. Based on the National Audit 0ffice’s costings of £155 per intervention: £1,550.
10 hours of the Parliamentary and Health Service Ombudsman’s time based on £30 an hour. £300.
For the Adjudicator’s Office to issue a mistaken fob off letter to me and forward my appeal to the Complaints Office: £30.
To contract a debt collector to phone and text my mobile with automated messages on an almost daily basis for 6 weeks and to call me. £75. (They may have been given a flat fee).
Compensation paid to me, £50 for stress and £10 for costs: £60.
My estimates suggest that HMRC might have spent more than double the overpayment they wanted to recover.
Surely there is a more economical and efficient way to provide working tax credits to people who they say are entitled to it. Even though I was still entitled to claim, I called up to cancel my claim as soon as I got a full-time job because the system they used required far too much of my attention. I needed to put this attention onto doing my job. I wanted to take responsibility for my own finances, but they wanted me to keep claiming.
Notice that: 75% of MPs time is spent on constituents’ tax credit cases. If an MP earns approx £65,000 a year,is each MP to be paid £48,750 to deal with tax credit issues? How many MPs? 650. This might be a wild calculation, but that would total £31,687,500 spent on dealing with Tax Credits inefficiency.
Even a fraction of that amount could be invested in creating a better system. Ideally that would be a system which considers public response as a way to gauge how efficiently it is working. So much money has been wasted and lives disrupted because this Working Tax Credits system refused to see how and when it could be improved.
I conclude that if the state considered – just considered – that some systems are not working and could be run more efficiently and economically, it could mean that Tax Credits could be issued to:
- Reach and support people who are entitled to it. – To not reach people who are not entitled to it.
- Issue payments in a way that is manageable for hard-working, low earning people, maybe with children, disabilities or other factors that impact on their earning potential.
- Ongoingly ask claimants clear questions to ensure the right amount of money is being issued.
- Not for a system that requires so much research, concentration, time and attention that those most able to claim are those not working, juggling families and other aspects of life that require their attention.