Too scared to claim credits

WORRIED families in Ipswich are so concerned about being dragged into debt through the tax credit system that they are deliberately not applying for entitlements.

WORRIED families in Ipswich are so concerned about being dragged into debt through the tax credit system that they are deliberately not applying for entitlements.

Ian Burnett, manager of the Ipswich and District Citizen's Advice Bureau, said many families are missing out on cash help because they are too afraid to apply.

He said: “The system's bad reputation is already leading to some families not bothering to apply.

“They are so worried about the risk of getting into debt that they are passing up on the potential financial benefits.


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“This is the last thing we want to happen.”

The news comes as it was revealed that growing numbers of working families are being forced under financial strain as the Government fails to get to grips with the system.

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The Ipswich CAB has today reported a 25per cent increase in queries from families concerned and confused about the credit system - which was introduced in 2003 in a bid to make life easier.

The worrying rise in calls in Ipswich reflects the problems nationwide where mistakes have leading to an estimated £2billion pounds being over or under payments.

Mr Burnett said: “Ever since the system was introduced the number of queries has built up.

“Sometimes people are getting thrown into a situation where they owe thousands of pounds all of a sudden. It's extremely stressful.

“In principle the system is tremendously beneficial and the majority of eligible families can and have benefited. It should be a slick and efficient system but it doesn't work like that.

“The problem is there are still a large number of families for whom things have gone wrong and the Inland Revenue and their computer system can't cope with the numbers.

“What's worse is there's nothing to show the situation is getting better.”

The tax credit system - which includes working tax credits and child credits - is run by the Inland Revenue.

The organisation claims the system has improved work incentives and reduced the tax burden on low to middle income families.

The majority of problems start when people's circumstances change throughout the year. It can mean their income levels end up being too great for the credits they receive, which leads to the Inland Revenue demanding repayment at the end of the financial year - either as a lump sum or by reducing benefits for the following year.

There is also often a delay in the changes being registered so debts can build up over two or more years.

The Government has reacted to the problems caused by its attempts to claw back credits by revealing that from November it will limit how much it can demand in overpayment amounts.

A spokesman for the Inland Revenue said: “Tax credits provide support to 20million people including 6m families and 10.1m children, and take-up is at unprecedented levels.

“Tax credits have improved work incentives, reduced the tax burden on low to middle income families and helped to dramatically reduce child poverty.”

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