Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, if he will take steps to change HM Revenue and Customs practice of not repaying incorrectly withheld arrears or underpaid tax credits to claimants as a lump sum.

To tackle the problems associated with families overestimating falls in income, since 2007, when claimants report a fall in income during the year, HM Revenue and Customs (HMRC) adjusts their tax credit payments for the rest of the year to reflect their new income level, but will not include a one-off payment for the earlier part of the year. At the end of the year, their award is finalised when their actual income is known. If they have been underpaid, a further payment will then be made. However, provisions are in place to make arrears payments to claimants suffering financial hardship.

The purpose of withholding the payment is to reduce the number and size of any overpayments and prevent customers incurring debt.

HMRC has provisions in place to support those customers who are suffering financial hardship and in those circumstances any withheld payments can be released and paid to the customer without having to wait for the claim to be finalised. There are no plans to alter the current practice.