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.