Post by Sapphire Capital on Jul 14, 2008 20:53:49 GMT 4
Tax credit fraud and errors cost £1.5bn last year
David Hencke, Westminister correspondent guardian.co.uk, Monday July 14, 2008
The government's flagship tax credit scheme has lost another £1.5bn through fraud and error, according to the latest figures released today by Revenue and Customs.
The figures show the total amount of tax credits written off by the department since the new payments were introduced in 2003 has risen by another £1bn to £7bn - a record.
The amount Revenue & Customs (HMRC) still needs to claim back from families also rose from £3.9bn to £4.3bn between April 2007 and April 2008.
The latest statistics on the tax credit programme, which now pays outs £20bn a year to more than 5.5 million families, led the National Audit Office to qualify the accounts of the agency again and to fresh criticism from Edward Leigh, Conservative chairman of the Commons public accounts committee.
The system has been under fire for inaccuracy for the last two years.
Leigh said: "The amount being lost to fraud and error is still running to unacceptable levels, with between £1.31bn and £1.54bn paid out to claimants in 2006-07 over and above their entitlement.
"Since 2003, the scale of overpayment on tax credits has also been immense, and in the first four years of the scheme HMRC overpaid a staggering £7bn.
"Vulnerable families who have been overpaid, already struggling within the current economic climate, face long-term repayments to the government through no fault of their own."
There has been a small improvement in the level of overpayments - which have fallen from £1.7bn to £1.5bn - but one in 12 people is still receiving the wrong money, which has later to be claimed back, and more money has had to be written off.
Revenue & Customs said: "We recognise the need to reduce error and fraud. It took a decade of steady pressure to get error and fraud in social security to 5% from the 13% the government inherited on job seekers allowance in 1997. Revenue & Customs has been set a target to reduce error and fraud levels to 5%"
Jane Kennedy, financial secretary to the Treasury, said in a written statement to MPs: "HMRC has strengthened its strategy for reducing error and fraud, building on the tax credits transformation programme.
HMRC will deliver targeted assistance to customers making a new claim, to help them claim more easily. This could range from straightforward advice when a customer requests a claim form to intensive help over the phone or face-to-face.
"Existing customers will receive support in areas in which they have difficulty to ensure that they are providing the correct information on which to base their awards, and help with the renewals process."
Tim Burr, head of the National Audit Office, said: "Levels of tax credits error and fraud are significant when compared with the expenditure on the scheme. I have therefore qualified my opinion on the regularity of these payments.
The report also criticises Revenue and Customs for a revamp of the VAT registration system - aimed at deterring criminals getting access to the system - which led to a significant delay in businesses being able to register for VAT.
Staff shortages combined with an old computer system which could not cope with VAT registration, led at one stage last year to only 7% of applications being processed within 14 days - against a target of 70%.
Burr said: "The department must strike a balance between stopping criminals entering the VAT system and ensuring legitimate traders receive their VAT registrations without delay. Its performance in processing VAT registrations is now operating in line with targets. "
David Hencke, Westminister correspondent guardian.co.uk, Monday July 14, 2008
The government's flagship tax credit scheme has lost another £1.5bn through fraud and error, according to the latest figures released today by Revenue and Customs.
The figures show the total amount of tax credits written off by the department since the new payments were introduced in 2003 has risen by another £1bn to £7bn - a record.
The amount Revenue & Customs (HMRC) still needs to claim back from families also rose from £3.9bn to £4.3bn between April 2007 and April 2008.
The latest statistics on the tax credit programme, which now pays outs £20bn a year to more than 5.5 million families, led the National Audit Office to qualify the accounts of the agency again and to fresh criticism from Edward Leigh, Conservative chairman of the Commons public accounts committee.
The system has been under fire for inaccuracy for the last two years.
Leigh said: "The amount being lost to fraud and error is still running to unacceptable levels, with between £1.31bn and £1.54bn paid out to claimants in 2006-07 over and above their entitlement.
"Since 2003, the scale of overpayment on tax credits has also been immense, and in the first four years of the scheme HMRC overpaid a staggering £7bn.
"Vulnerable families who have been overpaid, already struggling within the current economic climate, face long-term repayments to the government through no fault of their own."
There has been a small improvement in the level of overpayments - which have fallen from £1.7bn to £1.5bn - but one in 12 people is still receiving the wrong money, which has later to be claimed back, and more money has had to be written off.
Revenue & Customs said: "We recognise the need to reduce error and fraud. It took a decade of steady pressure to get error and fraud in social security to 5% from the 13% the government inherited on job seekers allowance in 1997. Revenue & Customs has been set a target to reduce error and fraud levels to 5%"
Jane Kennedy, financial secretary to the Treasury, said in a written statement to MPs: "HMRC has strengthened its strategy for reducing error and fraud, building on the tax credits transformation programme.
HMRC will deliver targeted assistance to customers making a new claim, to help them claim more easily. This could range from straightforward advice when a customer requests a claim form to intensive help over the phone or face-to-face.
"Existing customers will receive support in areas in which they have difficulty to ensure that they are providing the correct information on which to base their awards, and help with the renewals process."
Tim Burr, head of the National Audit Office, said: "Levels of tax credits error and fraud are significant when compared with the expenditure on the scheme. I have therefore qualified my opinion on the regularity of these payments.
The report also criticises Revenue and Customs for a revamp of the VAT registration system - aimed at deterring criminals getting access to the system - which led to a significant delay in businesses being able to register for VAT.
Staff shortages combined with an old computer system which could not cope with VAT registration, led at one stage last year to only 7% of applications being processed within 14 days - against a target of 70%.
Burr said: "The department must strike a balance between stopping criminals entering the VAT system and ensuring legitimate traders receive their VAT registrations without delay. Its performance in processing VAT registrations is now operating in line with targets. "