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MPs issue damning verdict on HMRC failures in fraud and error clampdown MPs issue damning verdict on HMRC failures in fraud and error clampdown
(4 months later)
A £5bn hole in the public purse has been caused by the failure of HM Revenue and Customs to clamp down effectively on fraud and error, MPs warn on Wednesday.A £5bn hole in the public purse has been caused by the failure of HM Revenue and Customs to clamp down effectively on fraud and error, MPs warn on Wednesday.
The House of Commons public accounts committee has concluded that tax officials will achieve less than half the projected possible savings from reducing fraud and error in the payment of tax credits.The House of Commons public accounts committee has concluded that tax officials will achieve less than half the projected possible savings from reducing fraud and error in the payment of tax credits.
Their criticisms come in a damning report after a torrid week for HMRC officials, who were taken to task by the committee for failing to gather evidence from whistleblowers about Google's sales activities in the UK.Their criticisms come in a damning report after a torrid week for HMRC officials, who were taken to task by the committee for failing to gather evidence from whistleblowers about Google's sales activities in the UK.
Margaret Hodge, the committee's chair, said MPs had been baffled by the Revenue's failure to clamp down on fraudulent activity and mistakes. "HMRC's performance in cutting the level of fraud and error in the tax credits system has been hugely disappointing and extremely poor. In these strained times, the government cannot afford these failures," she said.Margaret Hodge, the committee's chair, said MPs had been baffled by the Revenue's failure to clamp down on fraudulent activity and mistakes. "HMRC's performance in cutting the level of fraud and error in the tax credits system has been hugely disappointing and extremely poor. In these strained times, the government cannot afford these failures," she said.
The credits, which cost taxpayers £30bn a year, are based on the number of hours a claimant works. They are paid to about 6 million families.The credits, which cost taxpayers £30bn a year, are based on the number of hours a claimant works. They are paid to about 6 million families.
The 2010 spending review set HMRC a target of saving £8bn by 2015, but the committee believes it may miss its goal by £5bn.The 2010 spending review set HMRC a target of saving £8bn by 2015, but the committee believes it may miss its goal by £5bn.
In 2010-11 alone, HMRC lost £2.3bn to error and fraud – £850m more than expected – with one in five awards of tax credits thought to have resulted in overpayment. The following year, officials had written off £1.7bn in tax credit debts as uncollectable.In 2010-11 alone, HMRC lost £2.3bn to error and fraud – £850m more than expected – with one in five awards of tax credits thought to have resulted in overpayment. The following year, officials had written off £1.7bn in tax credit debts as uncollectable.
Although the committee said the HMRC had increased checks on individuals from 123,000 to almost 2m, it had resulted in only a doubling of the money saved. "HMRC needs a better understanding of its performance as it hugely overestimated its progress in tackling error and fraud," the committee added.Although the committee said the HMRC had increased checks on individuals from 123,000 to almost 2m, it had resulted in only a doubling of the money saved. "HMRC needs a better understanding of its performance as it hugely overestimated its progress in tackling error and fraud," the committee added.
An HMRC spokesman said officials had boosted targeted checks on tax credit claims by 10 times over the past four years, more than doubling the money protected, saving £390m in three key risk areas.An HMRC spokesman said officials had boosted targeted checks on tax credit claims by 10 times over the past four years, more than doubling the money protected, saving £390m in three key risk areas.
He said: "Work with the private sector has improved the data we use to make sure claimants' information is accurate and fraudulent claims identified. We are also getting tougher with claimants about the proof they need to support their claims, for example on childcare costs and on school leavers.He said: "Work with the private sector has improved the data we use to make sure claimants' information is accurate and fraudulent claims identified. We are also getting tougher with claimants about the proof they need to support their claims, for example on childcare costs and on school leavers.
"From 2014 the new Real Time Information system will provide accurate and up-to-date information for tax credit claims, significantly reducing fraud and error. We will continue to improve the service and quality of information we provide, while clamping down on the minority who seek to abuse the rules.""From 2014 the new Real Time Information system will provide accurate and up-to-date information for tax credit claims, significantly reducing fraud and error. We will continue to improve the service and quality of information we provide, while clamping down on the minority who seek to abuse the rules."
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