Headline:
£1.4billion tax credit write-off: PAC lays into HMRC
Description:
A new report by the Committee of Public Accounts (PAC) on tax credits has described HMRC as “incapable”. The department has already written off £500million in overpayments, and is unlikely to recover a further £1.4billion, the paper concludes. Rob Lewis reports.
PAC chairman Edward Leigh MP said “This is the fourth time that this Committee has had to examine the current tax credits system – and it will not be the last. Billions of pounds, far more than those who thought up the system ever envisaged, are still routinely overpaid to claimants. Very large amounts have to be written off. And the attempts to recover overpayments from genuine claimants have caused significant suffering to many families.”
Tax credits suffer from the highest rates of error and fraud in government, the report stated, yet HMRC has no up-to-date information on the money lost, not even routine estimations. Nor has it set targets for reducing the levels.
The Committee also criticised Revenue and Customs for dragging its heels over their proposed raising of the threshold for in-year increases in income. The Committee asked HMRC to supply the cost of this measure last year, but received no response until this week’s hearing. In the meantime they had to rely on the National Audit Office to provide an estimation.
HMRC’s failure to rely on the mandatory guidance issued by the e-envoy when opening its tax credits internet site is also mentioned. Following attacks by organised criminals, the site had to be closed down in December 2005.
The accounting bodies have been quick to join in the chorus of criticism. Chas Roy-Chowdhury, head of taxation at ACCA, described the situation as “shocking.”
“There is a real sense of déjà vu with this report,” he said. “A year ago, the ACCA called for better planning, co-ordination and management to tackle overpayment and fraud in the UK’s tax system. And we find ourselves saying the same today.”
source: accountingweb
PAC chairman Edward Leigh MP said “This is the fourth time that this Committee has had to examine the current tax credits system – and it will not be the last. Billions of pounds, far more than those who thought up the system ever envisaged, are still routinely overpaid to claimants. Very large amounts have to be written off. And the attempts to recover overpayments from genuine claimants have caused significant suffering to many families.”
Tax credits suffer from the highest rates of error and fraud in government, the report stated, yet HMRC has no up-to-date information on the money lost, not even routine estimations. Nor has it set targets for reducing the levels.
The Committee also criticised Revenue and Customs for dragging its heels over their proposed raising of the threshold for in-year increases in income. The Committee asked HMRC to supply the cost of this measure last year, but received no response until this week’s hearing. In the meantime they had to rely on the National Audit Office to provide an estimation.
HMRC’s failure to rely on the mandatory guidance issued by the e-envoy when opening its tax credits internet site is also mentioned. Following attacks by organised criminals, the site had to be closed down in December 2005.
The accounting bodies have been quick to join in the chorus of criticism. Chas Roy-Chowdhury, head of taxation at ACCA, described the situation as “shocking.”
“There is a real sense of déjà vu with this report,” he said. “A year ago, the ACCA called for better planning, co-ordination and management to tackle overpayment and fraud in the UK’s tax system. And we find ourselves saying the same today.”
source: accountingweb
Date:
10.05.2007
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