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They have said that £20 million is a far more accurate estimation.
The write-off — covering overpaid tax credits from the 2003-04 and 2004-05 periods — is a result of an oversight by HMRC, who failed to fulfil a legal requirement of informing claimants their payments were to be reviewed.
When the 'administrative problem' was revealed in July, Treasury minister Jane Kennedy promised that 'no household who has their case reviewed as a result of this issue will have their tax credit award reduced'.
The Conservatives have called for an investigation into the whole tax credit system, which has launched in 2003, and the party has claimed that the HMRC's write-off will total £500 million — an amount the HMRC insists is 'completely misleading'.
Shadow chancellor George Osbourne has demanded 'full disclosure of the scale of this problem: how many claimants are involved, how much the Treasury will have to pay back, and what the administrative cost of putting it right will be'.
HMRC have move to reassure tax credit recipients — typically low-income households — that 'they need take no action themselves' and they 'will continue to get their current payments as normal, and new tax credit applications are unaffected'.
