A UNIVERSITY graduate is seeking compensation from the Government, after its handling of her Working Tax Credits claim cost her business hundreds of pounds.

Sue Devey-Humpleby, 36, from Hartlepool, established her hand-crafted greetings card and supplies business, Paper Wishes, in December 2001, in offices at the University of Teesside.

The business was an immediate success, with more than 90 customers in the UK and Spain.

But since the Government introduced the Working Tax Credit system, aimed at topping up the earnings of low paid working people, things have not gone smoothly for Mrs Devey-Humpleby.

The mother-of-two said: "When I originally got notification of my tax credits award through the post, it was zero because they claimed I have no children.

"I have two children, aged 14 and three, who have been with me on my many visits to the Inland Revenue to try to get the mistake rectified."

After months of phone calls and visits to the Inland Revenue, Mrs Devey-Humpleby, has finally got her true tax credits award through.

But now she wants compensation for the money her business has lost because of the time taken sorting out the claim.

She said: "I've had to take time away from my business to stand in line at my local Inland Revenue office for emergency payments.

"I originally applied online for the Working Tax Credit, back in October last year, and it is now June. I thought by applying online I would make it easier for the Inland Revenue to process my claim."

Mrs Devey-Humpleby is now facing charges from credit companies and banks for failure to pay accounts on time.

She said: "I'm being asked to pay charges in excess of £300 because of failure to pay bills on time. I've also lost valuable time away from my business chasing the Inland Revenue.

"This has all happened at a vital time for my business, which is currently in a boom growth stage. Every minute I spend away is time that could be better spent expanding it."

She added: "Luckily for me, I was able to stop the bank from closing my business account because of a lack of funds. That could have really damaged my business in its early days.

"I thought the idea behind the Working Tax Credit was to encourage women back into business, but all this situation was threatening to do was force me back on to benefits."

Mrs Devey-Humpleby has written to the Paymaster General, Dawn Primorolo, who is ultimately in charge of the Working Tax Credit, but has so far received no reply.

She has also written to her constituency MP, Peter Mandelson.

She said: "I believe I should be entitled to compensation for the stress this put me under, and the way it threatened my business."

The only concrete support she received came from the Darlington branch of the Federation of Small Business.

Its chairman, Peter Troy, said: "Problems with the Working Tax Credit are putting extra pressure on micro-businesses.

"Mrs Devey-Humpleby and people like her made claims last year, and it has taken a long time to sort them out. It is the people who are most in need who are suffering."

He added: "While we have seen reports in the Press about extra call centre staff being drafted in to clear the apparent backlog, the system would still appear to be totally bunged up.

He added: "This is a classic example of bureaucracy and entrepreneurship being diametrically opposed. The Government needs to gain more understanding of how small businesses work."

A spokeswoman for the Inland Revenue said: "We make it our policy not to comment on specific cases.