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Data sharing breakdown hits disability payments

28/11/16

Families have lost thousands of pounds due to ‘gap in the data feed’ between DWP and HMRC

A Whitehall data sharing blunder has left thousands of families with disabled children up to £20,000 out of pocket.

Empty wheelchair - partial viewThe Department for Work and Pensions (DWP) failed to automatically pass on the details of families whose children qualified for extra benefits to Revenue and Customs (HMRC)

As a result, around 28,000 families whose children qualified for disability living allowance (DLA) missed out on an additional tax credit payment of between £60 and £84 a week.

Technically, the claimants are responsible for informing HMRC that they receive DLA – or its replacement, personal independence payment (PIP).

However, in practice the tax authorities have uprated claims automatically using data supplied by the DWP after families fill in a form for the department.

Safeguard mechanism

HMRC relies on the data share as a safeguard to ensure the extra child tax credits are paid even when claimants have not directly notified it that they receive the benefit.

For three years, between 2011 and 2014, what has been described as a “gap in the data feed between DWP and HMRC" meant awards were not automatically updated.

The blunder was not officially announced, but was hidden in documents that accompanied last week’s Autumn Statement – prompting accusations that ministers had attempted to bury the bad news.

The Government has set aside £360 millon over six years to ensure the families receive the extra tax credits in future. But the payments will be backdated only to April – at a cost of £95 million - which means families may have lost out on awards totalling up to £20,000 over the past five years.

The charity Contact a Family called for full compensation, telling The Guardian newspaper: “One thing is certain, this isn't the fault of families.

“When you tick a box on a government form, indicating you are in receipt of tax credits, you reasonably expect it's there for a reason - and there's a process in place that allows government departments to share this information.”

Prevent recurrence

And the Low Incomes Tax Reform Group, said: “It is important that HMRC work closely with DWP to ensure that the data feed works in future so this situation does not happen again.

"Although the claimant has a legal obligation to report changes to their circumstances, we often encounter claimants who quite reasonably assume that this kind of information is shared within and between government departments.”

The error occurred as then-Work and Pensions Secretary Iain Duncan Smith, was pushing through huge benefit changes – while slashing the department's budget and staff numbers.

 Image from zeevveez, CC BY 2.0 through flickr

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