As HMRC publishes its latest tax credits data, the Liberal Democrats criticise the 'overly complex' system.
The Liberal Democrats have blasted the government's tax credits system, as HM Revenue & Customs (HMRC) reveals the latest overpayment figures.
According to the HMRC data, there was £1 billion of overpayments in the 2007-08 financial year, less than half of the £2.2 billion overpaid in 2003-04. However, the Lib Dems have warned that this means more than £7.5 billion has been overpaid since the credits were introduced in 2003.
Tax credits are aimed at helping low-income families, but the level of overpayments has led to criticism that the credits create extra financial worries for households which then need to pay the money back.
"The reality is that the overly complex and supposedly 'flexible' system has meant misery and uncertainty for over two million families who have received overpayments since 2003, which are then clawed back by the Treasury leaving them facing financial hardship," the Lib Dems said in a statement.
"In a bid to recover the huge levels of overpayments, HMRC has become progressively more draconian in the way it pursues those who have been overpaid, regardless of whether they can prove that it was the fault of the claimant," the statement added.
However, HMRC claimed that 5.8 million families benefitted from the credits during the 2007-08 financial year, while the average tax credit award increased by £200 compared to the previous financial year, reaching £3,611 annually.
