To ask the Chancellor of the Exchequer
(1) whether his Department plans to change the way that tax credit overpayments are recovered;
(2) whether he has made an assessment of the merits of a system of suspending payments until the overpayment is cleared for dealing with tax credit overpayments.
HMRC's policy is set out in CoP26, "What happens if we have paid you too much tax credit." When HMRC seek recovery of an overpayment they seek to do so in a manner which will not put a family in financial difficulty. PBR 2005 announced that from November 2006 HMRC will apply automatic limits on recovery of excess amounts paid where awards are adjusted in-year following a reported change. These limits will be the same as the current limits on cross-year overpayment recovery, and will ensure that no low- to middle-income family faces unexpected reductions in tax credit payments.