UK Opposition Slams Tax Administration Cost

by Jason Gorringe, Tax-News.com, London

13 August 2002

Britain's opposition Tories say that the government should compensate business for the UK£1bn cost of administering the tax credit system, which tops up the income of poorer families and those with children - tax credits replace benefits which used to be paid through post offices or the government's own benefits administration system in the DHSS (Department for Health and Social Security).

The government itself claims that the working families' tax credit costs employers UK£105m a year to administer, but the Tories say that take-up has been higher than expected and estimate the total costs over the five years to April 2005 at £800m for the five years to April 2005, plus £200m for the children's tax credit.

David Willetts, the shadow work and pensions secretary, says the £1bn is a huge sum that companies can ill afford, and says that the government is to blame because of constant tinkering with the system: "Between 1999 and 2003, ministers will have introduced a new tax credit for families every six months," Mr Willetts said. "Today's figures reveal serious problems with the administration of tax credits. It's time for the government to acknowledge it."

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