HMRC to Miss Tax Credit Fraud Target, says PAC

In 2010 the government challenged HM Revenue and Customs (HMRC) to cut fraud and error by £8bn by 2015. The predictions of the Public Accounts Committee point out that the sum will be reduced by £3bn. Can you imagine how many legal documents you can buy with this amount of money?

A new point in the tax credit system proposes that parents returning to work should get financial support.

There will be a complex system taking into account age, income, hours worked, number and age of children, childcare costs and disabilities, which will allow low-income families, apply for tax credits. HMRC has to be aware of the changes in family circumstances.

It turns out that the claimant cannot totally understand the system and HMRC has many problems with its administration.

The results from the latest figures show that one in five awards featured an error or fraud; £1.7bn of these overpayments was written off because claimants did not intend to pay it; in 2010-11- £2.3bn was lost to fraud and error; the 2015 target will be missed by £5bn.

The committee advised HMRC to improve the information it gives to claimants in letters and through its helpline, and also check more carefully the information received back.

This increased the number of checks made by HMRC and respectively the number of appeals after payments were reduced or cancelled.

Many experienced financial hardship due to delays of six to eight months.

A spokesman for HMRC said that extra checks had saved £390m and helped the accurate usage of information.

“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.


Benefits Cap Introduced In Some Areas Of London

The new cap of benefits which now the government has begun to roll out, are expected to cover the whole country. Many people are wondering if this will affect the redundancy policy in the UK in any way.

Today the London boroughs of Bromley, Croydon, Enfield and Haringey will limit the amount of money which parents can receive from various benefits- couples and single parents will get £500 a week and single people will receive £350 a week. What will happen to the parental leave then?

The cap will now include people receiving disability benefits but will include income from jobseeker’s allowance, income support, housing benefit and child benefit. May be we`ll need a job application form templates more than ever.

From July to September the scheme will be introduced in other areas in England, Scotland and Wales.

The aim of this move is that the Department for Work and Pensions saves £110m a year.

In the words of employment minister Mark Hoban they aimed to create an affordable benefits system.

“This is about fairness,” said Hoban. “There are people in this country making difficult choices about where they live and who don’t claim housing benefits. If they want to escape the benefits cap, the best way to do it is to move into work.”

However, critics claim this move would make couples break up so that they would escape many financial limitations.

Investigations show that the main part of the non-working families with four or more children will be forced below the poverty line.

Others say that housing benefits cap would pay directly to landlords so the better thing the government could try to do is to call for more affordable housing and lower rents.




New Benefit Reform Under Question

According to a recent report by think tank Resolution Foundation, people working on a part-time employment contract and also people who are unable to secure a full-time job, will potentially lose their right for benefits. Statistics show that there are about 1.4 million people in the UK who have only part-time jobs. The reforms will target those adults who cannot find a full-time job. About 1.2 out of the 1.4 million will have to provide evidence that they deserve to keep their right for benefits.

The Department of Work and Pensions has targeted part-time workers in order to push them to find a full-time job. By removing the benefits entitled to those workers, the Department aims to force them into full-time employment so that they can make a difference not only for themselves but also for the community as well. Part-time workers will be thus encourages to get additional hours at their present jobs, to look for another job, or to seek a higher wage.

The reforms announced are also part of the government’s recent plan for introducing a new benefits system called Universal Credit. The Universal Credit plan will combine several existing benefit systems in one. Some of them include, but are not limited to, income-base Jobseeker’s Allowance, Child Tax Credits and Housing Benefits. Ministers strongly believe that the existing benefit system is costly and outdated and thus needs to be replaced with a new one. The Universal Credit plan is said to replace the current system and to be implemented in October 2013.

Despite the positive sides that the government sees in the reform, there are also concerns whether or not it will actually work in practice. According to the Resolution Foundation, if the reform is put into practice, it might be really difficult for the job centers to cope with additional 1.2 million people. Many other organizations also expressed concerns about the new reforms and system and questioned its implementation. One of the concerns is that it will not be possible for the claimants to take extra hours at work or even find another job. With 1.2 million people the odds of finding a second part-time job, or even a full-time employment, are close to impossible. There are also even bigger concerns regarding the currently weak labor market and the fact that people are willing to work more hours but there is no opportunity to do that. As good as the reform may sound; it is actually questionable whether or not claimants will be able to function in this context.

It was reported that in the past month about 74 charities, councils and other organizations had submitted written papers of evidence revealing all the concerns and questions they had about the new benefit system and how hard it will be to implement and put into practice. Some of the issues discussed in those papers concerned risks of paying benefits to one household member and whether the IT infrastructure as well as staff will be ready in time.