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Tax credit problems 'cost £1.5bn' Tax credit problems 'cost £1.5bn'
(30 minutes later)
Up to £1.5bn of tax credit payments were lost to fraud or error in the year to April 2007, the National Audit Office says. Up to £1.5bn in tax credit payments was lost to fraud, accidental overclaims and other errors in 2006/07, the National Audit Office says.
This meant that between 7.2% and 8.4% of all money given out in credits went to claimants not entitled to it. This accounted for 7.2% and 8.4% of all the money given out in credits during this period, it added.
The NAO's head, Tim Burr, said the size of the problem was "significant". The NAO's head, Tim Burr, said the size of the problem facing HM Revenue and Customs was "significant".
But the proportion of tax credit funding lost by HM Revenue and Customs in this way was falling, the NAO's report said. But the proportion of tax credit funding lost in this way was falling, the NAO's report said.
'Respond effectively''Respond effectively'
The figure for 2006/07 was between £1.28bn and £1.5bn, it was calculated. This was down from between £1.3bn and £1.64 the previous year.The figure for 2006/07 was between £1.28bn and £1.5bn, it was calculated. This was down from between £1.3bn and £1.64 the previous year.
Mr Burr, the comptroller general, said: "Levels of tax credits error and fraud are significant when compared with the expenditure on the scheme...Mr Burr, the comptroller general, said: "Levels of tax credits error and fraud are significant when compared with the expenditure on the scheme...
"HMRC now has a target and has developed a strategy for reducing error and fraud. It will need to monitor how the measures it adopts are contributing to the achievement of the target and to respond effectively.""HMRC now has a target and has developed a strategy for reducing error and fraud. It will need to monitor how the measures it adopts are contributing to the achievement of the target and to respond effectively."
Treasury Minister Jane Kennedy said levels of fraud and error were falling, and that no more that 5% of tax credit payments should be lost in this way by April 2011.Treasury Minister Jane Kennedy said levels of fraud and error were falling, and that no more that 5% of tax credit payments should be lost in this way by April 2011.
Liberal Democrat work and pensions spokesman Jenny Willott said: "The tax credits system is so complex that it is abused by fraudsters, misunderstood by claimants and mismanaged by officials."Liberal Democrat work and pensions spokesman Jenny Willott said: "The tax credits system is so complex that it is abused by fraudsters, misunderstood by claimants and mismanaged by officials."
Earlier this year it was revealed that rightful tax credit claimants had been overpaid by £1bn in 2006/07.Earlier this year it was revealed that rightful tax credit claimants had been overpaid by £1bn in 2006/07.