The idea behind the system is to target government money at people when they most need it: in this case, families with young children, even if their parents have a job.
It gives money back to low and middle income families, in the form of tax credits, rather than handing out welfare benefits.
But, according to the Citizen's Advice Bureau, as many as one in three families have received overpayment - and, when the Revenue claws the money back, it can cause extreme hardship.
And, the Parliamentary Ombudsman, who's also been investigating Family Tax Credit, is calling for the first two years' overpayments to be written off altogether.
We put some of your concerns to the government minister in charge of the system - the Paymaster General Dawn Primarolo.
She told us she's still considering whether to write off overpayments, as the Ombudsman wants.
A recording of our full interview will be available shortly. Further details from BBC News Online's finance specialists
More than half of overpayments made topped �500.
CAB's damning report - based on 150,000 cases handled by the charity, - said that HMRC had "failed to live up to its own standards of information, clarity and efficiency of service" in the administration of tax credits.
One of the chief gripes reported to the CAB was the overpayment of tax credits.
HMRC recently admitted that of �13.5bn paid out last year, �1.9bn consisted of overpayments. CAB said the "huge overpayments" were due to HMRC system failings.
Appeal call
Instead of trying to claim back overpaid tax credits the charity called for an amnesty.
"In the light of the historic level of administration errors, more overpayments should be written off," the report said.
In addition, CAB called for better training for HMRC staff, better advice for claimants and a "proper independent right of appeal" against HMRC decisions.
Meanwhile, in her report, Parliamentary Ombudsman Ann Abraham accused Ms Primarolo of failing to give accurate information when questioned about overpayments in the House of Commons in February.
Ms Abrahams also said she was unable to say how many overpayments were due to government mistakes and how many were down to delays in claimants reporting a change in circumstances.
'Sensible response'
But her report echoed CAB's call for an amnesty on the recovery of overpayments, particularly those caused by official errors in the first two years of the scheme.
In response to the claims in the CAB report, HMRC told BBC News that technology problems had led to mistakes but that millions of families had benefited from tax credits.
"While there were much-publicised IT and processing errors that occurred when the system was introduced two years ago, HMRC now has a new IT partner and the system is stable," an HMRC spokesperson said.
"Over six million families and 10 million children are currently benefiting from tax credits, but we take all complaints very seriously and we're committed to doing everything we can to reduce the number of complaints."
One-Minute World News 
News services
E-mail this to a friend 
Printable version 
Over six million families and 10 million children are currently benefiting from tax credits but we take all complaints very seriously 
