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.


Nick Clegg To Announce Flexible Parental Leave

All parents-to-be will be able to share up to an year of parental leave, according to new rules, which are set to come into force in 2015. The new rules will be announced by Nick Clegg and according to them, both parents will be able to share the 52 weeks parental leave in a way suitable for them, with the only exception of the first two weeks after the baby`s birth. After the first two weeks, mothers can get back to work and share the parental leave with their partners.

At the moment, new mothers can take a maximum of 52 weeks of leave after the birth of their child, while fathers are entitled to two weeks of statutory paternity leave of their own.

Nick Clegg says: “From 2015, the UK will shift to an entirely new system of flexible parental leave. Under the new rules, a mother will be able to trigger flexible leave at any point – if and when she feels ready. ”That means that whatever time is left to run on her original year can be taken by her partner instead. Or they can chop up the remaining time between them – taking it in turns. Or they can take time off together – whatever suits them. The only rule is that no more than 12 months can be taken in total; with no more than 9 months at guaranteed pay. And, of course, couples will need to be open with their employers, giving them proper notice.”

Back in time the idea of flexible parental leave has been scrapped, because of a strong opposition from businesses, backed up  by Conservatives. The main reason for that opposition was the fact that estimations showed that this might have a negative effect on the whole business structure , especially for small businesses, having in mind the current economic situation.

In addition to the flexible parental leave, the fathers-to-be will be able to take unpaid leave, in order to attend medical consultations and appointments with the expectant mother “Lots of fathers will tell you that these moments are when it can start to feel real for them,” Clegg will explain. “This new right means no father will ever need to miss out.”