REVENUE & CUSTOMS was accused of driving low income families into hardship by demanding full repayment of overpaid tax credits yesterday.

Figures released by the Revenue yesterday showed that almost one-third of the 5.6 million tax credit awards in 2003-04 were overpaid. The Revenue said that in almost all cases it was seeking full repayment. The 1.8 million overpayments in the period amounted to £1.9 billion.

One Parent Families, a charity that is pressing for reform of the tax credits system, said that the clawback would deal a blow to stretched household budgets. About one million of the overpayments were more than £1,000 each, while 40,000 were for more than £5,000.

The child tax credit and working tax credit are means-tested allowances designed to boost family income and to help members of lower-paid households into work.

Elizabeth Barlow, from Humberside, was fighting the Revenue’s claim to £2,800 that it wrongly paid to her after it miscalculated her tax credit award. “I am suffering real hardship because of the Revenue’s decision,” she said. “It is over a year since it reduced my tax credits from £550 per month to £192 per month.”

The Revenue said: “The vast majority of overpayments were caused by rises in family income, the result of more people moving into work.”