17 Jul 2017

And now tax credit fraud

Almost £1.6billion of tax credits have been overpaid in a year due to a rise in benefit fraud and errors by HM Revenue & Customs.

The National Audit Office watchdog warned the problem was set to get worse as HMRC becomes more overstretched, and hundreds of thousands of people on low incomes move from tax credits to the new Universal Credit system.

HMRC’s annual report revealed that an estimated £1.57billion of overpayments were made due to error and fraud in 2015/16.

This is up almost 15 per cent from £1.37billion in the previous year. It is the first increase since the Coalition came to power in 2010.

About 4.4million families claim working tax credits or child tax credits to top up their income.

For the first time since 2012/13, HMRC also missed its target of ensuring the amount overpaid due to fraud or error was less than 5 per cent of the total amount paid in tax credits.

The NAO said: ‘HMRC’s estimated increase in error and fraud within tax credits is contrary to the significant reductions achieved in previous years, and the rate is expected to increase further.’

HMRC sacked US firm Concentrix last October after bringing it in to crack down on fraud. It got rid of the firm in response to claims that 45,000 people were wrongly having their benefits removed. This means HMRC staff are having to counter fraud themselves. Tougher rules designed to stop bogus benefit claims are also likely to push up the fraud figures.

Last night Lib Dem MP Jamie Stone said: ‘People will be shocked to see that while their local schools and hospitals are facing cuts, almost £1.6billion of taxpayers’ cash has been paid out due to fraud or error. Meanwhile, some people are still not receiving the payments they deserve. The Government needs to get a grip.’

Frank Field, Labour MP and former chairman of the committee, said: ‘We need to safeguard taxpayers’ money.’


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