Poor face wait for tax credit

The Inland Revenue admitted yesterday that low-income families could miss out on the government's new tax credits, following mistakes by staff administering the scheme.

The agency said it was drafting in extra staff to handle queries about the child tax credit and working tax credit, which are due to take effect from April 6, but could not guarantee that mistakes would be cleared up before April's salary cheques were sent to employees.

It admitted there had been a surge in calls from people wanting to find out more about how their tax credit was calculated or to complain about errors in their award notices.

A spokesman for the Revenue said: "We do our best to minimise mistakes and to spot them and put them right. But, given the volume of claims being processed, on occasion we will make mistakes in collecting the necessary information.

"Where mistakes occur we'll investigate and sort things out as soon as we can." It was possible some errors would not be put right until May, he added, but payments would be back-dated.

Tax experts said thousands of families could miss out on vital cash next month because the Revenue had left it too late to sort out clerical errors.

Anne Redston, tax partner at accountants Ernst & Young, said: "People who are moving off the old tax credits to these new ones have become dependent on these payments. If they miss out on some or all of the money and they have a three-week gap they could find they can't pay the mortgage."

Award notices were sent out last week by the Revenue following a six-month publicity campaign advertising the credits.

Couples and families living on incomes up to £14,000 can claim working tax credit. The Chancellor, Gordon Brown, has also brought in a new childcare benefit for couples earning up to £30,000. Families earning up to £54,000 can claim the child tax credit.

At the last budget Mr Brown said 90% of families would be eligible to claim the new credits and so far more than 5m forms have been sent out.

In the budget announcement next week he is expected to hail the new credits as a vital lever to raise low income families out of poverty.

Critics have warned, however, that the system is over-complicated and will lead to confusion among claimants.