Cut to child benefit is the worst shambles since poll tax, says MP

The handling of George Osborne’s scheme to strip child benefit from higher earners has been described as “one of the biggest administrative shambles since the poll tax”.

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The Daily Telegraph disclosed on Thursday that more than 300,000 people had not been warned by HM Revenue and Customs that they must start filling in complex tax returns unless they stop claiming child benefit before next week.

More than 13,000 people contacted HMRC to “opt out” of child benefit payments on Thursday amid widespread complaints about the failure of the authorities to warn people who are affected.

Last autumn, the tax authorities said that more than 1.1 million people who will lose the right to claim child benefit from next Monday would receive letters warning them that they must either opt out or start repaying the benefit in the form of higher tax. HMRC has now admitted that only 784,000 people have been written to and therefore more than 300,000 claimants may be unaware of the requirement.

Amid confusion about what parents are supposed to do, many couples took to social media networks to seek advice.

The Telegraph has been contacted by a series of readers with relatively straightforward tax affairs who had not been contacted.

Chris Leslie, a shadow Treasury minister, told the BBC that the handling of means-tested child benefit was “one of the biggest administrative shambles since the poll tax”. Ministers said they were pleased at how the new system was being introduced. David Gauke, the Exchequer Secretary to the Treasury, said there had been a “good response” to the changes.

He said: “So far we are getting a good response — slightly more people have opted out of child benefit than we had expected and that suggests the message is getting across even though not everyone will have got a letter.”

Mr Gauke added that the Government had looked at taxing household income instead of withdrawing child benefit but decided it would be too complicated .

He said: “The difficulty of that was that you would have to put eight million households essentially in the tax credit system and as far as the burden of form filling that people are worried about, that would be a much greater issue.”

Ian Dunton, a 46-year-old IT worker, knew that he would no longer be eligible for child benefit but struggled to find information about the new system, branding it “chaos”. Mr Dunton who earns £62,000, said: “I knew I should have received a letter so I called the child benefit agency but they said I had to call the tax office.

“I was hoping they could explain what would happen . . . I didn’t want to suddenly receive a large bill. But the tax office accused me of trying to avoid paying, which was ridiculous. The whole system is total chaos.” Jojo Sanders, a mother of two who works for an investment bank, said she had not received a letter and had attempted to opt out of the child benefit system. “I have received no notification from HMRC that they have received my request or that the payments will stop. Who knows?” she said.