Autumn Statement: Measures to combat fraud and error need rebalancing to prevent error arising

Published on 5 December 2013

The LITRG has welcomed HMRC’s continued commitment to reducing fraud and error in the tax credits system. However LITRG is concerned that HMRC continue to focus on measures that tackle fraud, when in fact the greatest loss to government comes from error. HMRC also continue to conflate fraud and error and fail to identify official error.

This follows the announcement of further details of HMRC’s strategy in this area alongside today’s Autumn Statement.

Anthony Thomas, Chairman of LITRG, said:

“In order to tackle fraud and error effectively it is essential to distinguish between fraud and the three main types of error: HMRC official error, claimant error and contributory error.

“Some of the measures announced today are welcome: for example, those designed to prevent overpayments arising, which can cause problems when claimants have to repay them at a later date. However, there needs to be a safeguard, to ensure that people who would be plunged into hardship as a result of this measure can continue to receive payments, particularly if the overpayment has been caused by HMRC error or incorrect advice.

“We are concerned that most of the measures are aimed at dealing with fraud; a greater loss to the Exchequer arises from error, and the best means of tackling this is by providing better information, communication and education. The majority of the measures announced today are aimed at dealing with fraud and error once it is in the system rather than stopping it entering the system in the first place. There is also a worrying failure to recognise that some error leads to underpayments of benefits and tax credits, and this issue needs to be tackled too, to ensure balance between HMRC and claimants.

“LITRG is also concerned about the proposed increased use of private debt collection agencies. If this measure is to proceed, it is essential that the agencies apply the same standards as HMRC would and that their adherence to these standards is well-monitored. In particular people must be given a reasonable time to make a payment arrangement.”

(05-12-2013)

Contact: Robin Williamson (please use form at http://www.litrg.org.uk/ContactUs)