Tax credit fraud and errors costing HMRC £1bn a year

MORE than a billion pounds of taxpayers’ money is being lost through fraud and errors made on tax credits and the problem is getting worse.

A report has found that HM Revenue and Customs wasted £1.6 billion in 2015-16 – 5.5 per cent of the total spending on tax credits – up from £1.4 billion the year before, and ministers expect the figure to go higher.

Last year over-payments of tax credits accounted for £1.57billion, the National Audit Office found, and errors and fraud are increasing. The introduction of Universal Credit will only make the problem worse, it added.

Despite these issues, Sir Amyas Morse found the Government’s tax col- lectors improved on answering phone calls, cutting the wait time from 12 minutes to four. And HMRC as a whole has raised more in taxes than ever before.

It raised £574.9 billion and reclaimed £29billion from its tax avoidance and evasion programme.

However, the watchdog raised concerns about the amount of money HMRC has been able to save as part of wider spending crackdowns and about the number of investigations it is undertaking, which are likely to go over budget and be subject to delays. Sir Amyas, Comptroller and Auditor General of the National Audit Office, said: “HMRC collected more tax revenue in 2016/17 and improved its service levels for taxpayers.

“However, error and fraud is rising within tax credits and HMRC needs to make it easier for claimants to get help.”

An HMRC spokesman said: “While the [fraud and error] figure still remains lower than it has been in the past, we will analyse the causes fully in order to ensure people receive only the money they are due.

“We are working hard to make it as easy as possible for tax credits customers to keep their claims up to date so they receive the correct amount of money.

“Customers must give us accurate information and let us know if their circumstances change straight away, to avoid getting into a debt they’ll later have to pay back. HMRC will continue to take firm action on those who make dishonest claims and help make it easier for customers to get things right.”