From the TUC

Tax Credit Fraud: one more success story the government won’t welcome

22 Jun 2011, by in Society & Welfare

How much Tax Credit fraud takes place? As of today, we know the answer to this question: in 2009/10 no more than 1.9% of finalised tax credit entitlement was accounted for by fraud and 1.4% was a more likely figure. What is more, this figure was down from 2.3% in 2008/9.

HM Customs and Revenue have just published the Child and Working Tax Credits Error and Fraud Statistics 2009-10, which presents the new figures, based on an investigation of over 2,500 random cases that were investigated by “claimant compliance officers who worked the cases as they would for any other enquiry”.

The total for fraud and error favouring the claimant is 7.4%, down from 8.9% in 2008-9. The estimates for fraud are set out as a “lower bound”, a “central estimate” and an “upper bound” – the lower limit is 1.0%, the upper is 1.9% and the central estimate is 1.4%.

In 2008-9, these figures were 1.6%, 2.0% and 2.3%. There were similar reports before last year, but the report says that they aren’t comparable because the classification of fraud changed in 2007-8 and a larger proportion of error and fraud is now classified as fraud.

The report also includes an estimate of the level of fraud:

Number (‘000)

Amount (£m)

Lower bound Central estimate Upper bound Lower bound Central estimate

Upper bound

70

100

130

260

380

500

Remember that HMRC data shows that 6.25 million families benefitted from tax credits in 2009-10 and total awards amounted to more than £26.6 billion.

The report includes a breakdown of “fraud and error” by type of award, value of award and reasons for error or fraud, but doesn’t provide figures for fraud by itself because of

the small number of sample cases in the Error and Fraud Analytical Programme classified as ‘fraud’.

I’m waiting for the speech from George Osborne or Iain Duncan Smith giving the news as big a welcome as they did for the figures on social security benefit fraud.

One Response to Tax Credit Fraud: one more success story the government won’t welcome

  1. Becky Evans
    Aug 12th 2011, 4:17 pm

    The news that tax fraud is being investigated is good news. However, again it is on working people who maybe have claimed extra because they do not earn a living wage. The investigations into large company fraud, directors expenses and dividends paid instead of wages(and less rate of tax deducted) is still alot less vigorous than working people claimimg a couple of pounds more to make ends meet!!!