The good news for people using the new tax credits part of the HMRC website is that it is much more helpful for the majority of claimants than previously.

The bad news is that there are some glaring errors; the one we are focusing on for the purpose of this article is the 'Do I qualify' tool which has been devised to give potential tax credits claimants easy guidance as to whether they might qualify.

Likely scenarios

For illustration purposes we have taken just two of the many situations where the wrong advice is given.

The mover into work

Caroline is divorced and has not been employed for a few years, but as her only child has now left for university she wants to work. She gets a job in May 2008 working 30 hours a week and earning £19,000 a year.

She goes to “Do I qualify” and enters in her details as asked. The answer tells her that she is unlikely to qualify as her income is too high.

The correct answer is that she qualifies for Working Tax Credit because her base year for credits is 2007/08 when her income was much lower, and a visit to the EntitledTo calculator would quantify her entitlement as £2,366.

She will of course no longer be entitled to payments of Working Tax Credit from April 2009, but what she would have received in the intervening months would have greatly assisted her move into work – if only she hadn’t been misled by the calculator.

Those with a disability

Dermot is aged 28, single and has been working 30 hours a week for the last two years and earning £13,000 working in a library. He is entitled to Disability Living Allowance because he is a wheelchair user.

He goes to “Do I qualify” and enters in his details as asked. The answer tells him that he is unlikely to qualify as his income is too high. However there is a note in smaller print saying that if he has a disability he might be entitled and he can check by ringing up the Tax Credits helpline.

The correct answer is that he qualifies for Working Tax Credit and a visit to the EntitledTo calculator would quantify his entitlement as £2,379.

So disappointing

The “Do I Qualify” calculator is a good idea and it so disappointing that the programming is deficient.

The areas where the calculator is wrong (that we have spotted so far) are where your income for 2007/08 was less than in the current year; it gives you an answer based on the current year figure instead of last year’s.

It was also programmed without thought for those with disabilities or who might be entitled to the 50 plus element of Working Tax Credit and who work 30 hours a week.

We reported these errors to HMRC as soon as the tool appeared. They have made some minor wording changes and made an extra step for those with disabilities (which is unacceptable in itself) but have not taken it down from the web or added appropriate “health warnings”.

HMRC have told us that they are close to unveiling a new version, so we are grateful to them for taking on board our issues, but for now our advice is to use a free calculator such as EntitledTo or the HMRC full calculator, but even the latter has deficiencies.

We will re-test the HMRC tool when it is revised and report on the website.