RegulationMay 22 2013

MPs slam HMRC for losing £2.3bn to ‘error and fraud’

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ByMichael Trudeau

HM Revenue and Customs has been chastised for failing to reduce how much money is lost to error and fraud, which according to a report by an influential panel of MPs cost £850m more than projected in 2010/2011 and forced cuts to a wider array of government spending areas.

In 2010-2011, HMRC lost £2.3bn to error and fraud, £850m higher than projected. The Revenue admitted that more than two-thirds of this was lost due to error, the report from the Committee of Public Accounts states.

In the 2010 Spending Review, HMRC’s target was to save £8bn from reducing tax credits error and fraud by 2015. However, it now estimates it will miss this target by £5bn.

Parliament released a report damning HMRC’s approach to tackling the error and fraud problem, saying the department “hugely overestimated its progress” when actually it had “not done enough to reduce error and fraud resulting from claimants not reporting their circumstances accurately”.

At a session of the Committee of Public Accounts held in March, committee chair Margaret Hodge said: “A lot of money is being lost. Clearly, if the government do not get the money that they are losing through fraud and error, they will have to cut other services to cut the deficit, so we will all have an interest in ensuring that fraud and error are minimised.”

HMRC paid £30bn in tax credits in 2011-2012, providing support to nearly 6m individuals and families.