Sky News understands that 29,000 government debt cases - some where the government is at fault, rather than the claimant - are now being handled by private debt collection agencies, despite cost of living pressures.
After Sky News intervened, HMRC agreed that Ms Welch was not at fault and has now cancelled the debt.
"It's hard for a mother to give up one child let alone three because they're mentally unwell. It wasn't an easy thing to do. [It takes me back to] a place I would never want to be in again. It makes me feel ashamed and terrible. She was then told to repay back £909.29 that had been overpaid to her. When she sought an explanation, an HMRC representative told her that the overpayment could only be explained by a"computer glitch" but she would have to repay it regardless.However, HMRC has warned her that the debt will be recouped through any future universal credit claim. Her debt has now been passed onto a private debt collection agency and she is on a payment plan for the next seven years.
HMRC accepted that Vicky did nothing wrong and apologised for its failure to clearly explain the debt to Ms Timlin. "To ensure customers receive regular payments of a similar amount, tax credits awards are calculated across the 12-month financial year," HMRC said. Campaigners say the system is causing widespread distress at a time when the cost-of-living crisis is already driving families into poverty.The Trussell Trust, which oversees a network of more than 1,300 food banks across the UK, has said the vast majority of its visitors were in debt to the government.
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