HMRC Tax Credit crackdown misses target by "a mile"

Simon Ward
by Lovemoney Staff Simon Ward on 14 February 2013  |  Comments 8 comments

The tax office spectacularly failed to achieve the drop in fraud and errors it had promised for the 2010/11 tax year.

HMRC Tax Credit crackdown misses target by "a mile"

HM Revenue & Customs (HMRC) has missed its 2010/11 target for cutting down on Tax Credit errors and fraud by “a mile”.

HMRC said it would cut losses by £1.4 billion, but actually only managed to reduce them by less than £500 million. This meant overall losses of nearly £2.3 billion for that tax year, mostly due to errors.

This is despite the fact it put 400 extra staff on the two-year project.

The National Audit Office (NAO) said HMRC had “overestimated the impact of its activities”. As a result, over 1.4 million people were paid more than they were entitled to.

HMRC targeted claims at the “greatest risk of containing fraud and error”, but appears to have been spectacularly unsuccessful at pursuing others.

In a report, the NAO said the tax authorities had not developed an effective method of stopping errors and fraud reoccurring after an incorrect claim had been corrected. It also criticised its monitoring of the misreporting of hours worked by claimants, which is a key determiner of whether people can claim Tax Credits, and undeclared partners earning income.

And errors and fraud caused by children being incorrectly included in payouts doubled between 2008/09 and 2010/11.

The NAO said that HMRC was “not yet achieving value for money” in this area. It also said that HMRC won’t achieve its target of £8 billion of Tax Credit savings between 2011 and 2015.

Labour MP Margaret Hodge, chairwoman of the Commons public accounts committee, said: “It set itself a target... which it missed by a mile. In 2010/11 error and fraud was still at 8.1%, with £2.27 billion lost to the taxpayer – £850 million higher than expected and money that could have been spent on our schools and hospitals.”

The Government hopes the introduction of the simpler Universal Credit will help prevent these losses in future.

More on tax

HMRC crackdown on tax-dodging Southerners

Middle-income tax dodgers face CPS crackdown

HMRC crackdown on tax-dodging top earners

Calls to HMRC cost us £136 million!

How to claim your Tax Credits

How to renew your Tax Credits

How to make sure you’re on the right tax code

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Comments (8)

  • markwall
    Love rating 10
    markwall said

    When HMRC force higher tax payers, and there are more and more of us each year as the threshold gets ever lower, to do their own accounting instead of collecting the money at source then fraud will happen. My company has a share scheme and HMRC collects tax on the dividend at source. For lower rate tax payers that;s the end of the matter. For higher tax payers we have to fill in a horrifically complicated tax return to pay an additional 22%. Why not just collect it at source? The mechanism is there to collect the first 10%. I don't have a huge salary but due to the constant reduction in allowances I've become one and have to spend days doing complicated forms that could be dealt with automatically instead. I guess some people aren't trying to commit fraud, they are just overwhelmed by the forms. Before anyone scoffs and says "don't earn so much" just wait until you become a higher tax payer... at this rate anyone who works more than 20 hours a week will be higher tax within 10 years.

    Report on 17 February 2013  |  Love thisLove  1 love
  • curlyboab
    Love rating 0
    curlyboab said

    "It's no surprise is it. They don't understand their own systems. When they deal with you they are rude and arrogant. This is mainly because they ALWAYS think they are in the right and do not listen to explanations, even when it is their fault the problem has occured in the first place."

    I totally agree with the above as am having a dispute with HMRC as we speak and its scary!! I have been disputing my "overpayment" since end September 2012 and all I have received from them is misleading advice and information in the most robotic manner that its actually quite disgusting and they will not give me a breakdown or relevant explanation but refer me to a credit reference agency which I did but am no further forward....does anyone know how I can persuade them that I AM a single mother with 3 kids who has only allowed their ex-partner to use the address for him to have mail forwarded to? The house is jointly owned by us but we have the agreement that the house will be sold once the youngest child has finished schooling. I pay all the bills including the mortgage and have provided copies of my payslip/bills/bank statements etc but to no avail. They are now demanding £13,500 which can be paid over a 12 month payment plan.....how thoughtful eh? Except that what they expect me to pay each month, I dont even earn in one month!!! And may I add they also confirmed that it was perfectly fine to allow someone to have their mail forwarded to your address so basically feel as if I am damned if I do, damned if I dont : ( I dont know enough about this topic as have never been on the dole/benefits etc.

    When I first contacted them, I was lied to and what advice they asked for in the first conversation was firmly denied in the second but as working as a PA for 17 years, I think, or rather hope, that I am more than capable of taking a telephone message properly and I know that the robot lied to me.

    Can anyone advise a desperate and extremely worried mum with regards to how I can prove I am single....which I did not think would be hard but have found out otherwise and also will my bank account be frozen therefore stopping me from paying my mortgage etc. Where do I stand as am at the end of my tether and dont want to speak with them on the phone as would prefer to have their replies in writing now.

    I have done nothing wrong but as you say they think they are right and that the world is just plain black and white when unfortunately these days it is just a mass of ugly dark colours.

    I have worked since I was 14 years old and if this is what my tax has been paying for the past 27 years then what a waste of my hard-earned money!!

    Any comments would be much appreciated please.

    Report on 05 March 2013  |  Love thisLove  0 loves

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