Thousands chased by HMRC debt collectors due to overpaid tax credits
False Economy’s figures show HMRC relied on 12 debt collectors to right its own mistakes on 215,144 occasions.
Hundreds of thousands of people were referred to debt collectors by the HM Revenue and Customs (HMRC) in a single year because their tax credits were overpaid, it has been revealed.
Figures collected by anti-cuts group False Economy showed that, in the financial year 2013-14, the HMRC relied on 12 different debt collection agencies to right its own mistakes on 215,144 occasions. And, in more than 80 cases, debtors’ assets were seized in order to pay back HMRC.
Those targeted would usually be some of society’s poorest and often completely unaware that they were in debt to the government, the group said.
“Debt collectors rule by fear, not necessarily by going round to people’s houses with a baseball bat,” said Chaminda Jayanett of False Economy. “But there is the fear of being pursued through the courts by them. It is the implied fear and threat when you get constant harrassment form people saying you owe the government a lot of money that is the worry,” he added.
Recipients of tax credits give HMRC an estimate of their earnings, which is used to work out how much they should receive. If the government overestimates that figure, as in many of the cases above, it will seek to recoup the money.
“There are cases in which people have told HMRC that the wrong figure was being paid, but were told it was not; only to be told later that the figure had, in fact been incorrect, and they were now in debt,” said Jayanett.
He added that most people who are on tax credits rely on them to make ends meet. Consequently, he said, they find themselves in a situation in which they are taking money “from their tax credits to pay back their overpaid tax credits”.