HM Revenue & Customs : Tax Credits Error and Fraud, Fourth Report of Session 2013-14, Report, Together with Formal Minutes, Oral and Written Evidence

HMRC paid GBP30 billion in tax credits in 2011-12, providing support to nearly six million individuals and families.

Yet in 2010-11 one in five awards contained error or fraud which resulted in claimants receiving more money than they were entitled to.

GBP2.3 billion was lost to error and fraud in 2010-11, GBP850 million higher than expected.

HMRC's target was to save GBP8 billion from reducing tax credits error and fraud by 2015, but it will miss this target by GBP5 billion.

HMRC needs a more realistic target for the amount of savings it should achieve from reducing error and fraud.

The support provided to claimants, in writing and through its helpline, also needs to be improved.

This will help ensure claimants receive the correct amount and avoid overpayments.

In 2011-12, HMRC wrote off GBP1.7 billion of tax credits debt.

HMRC must work more closely with organisations that represent claimants to get a better understanding of where claimants need help so it can make improvements to the support it provides.

Greater checking of awards led to an increase in appeals against decisions to reduce or terminate the amount of tax credit paid. But insufficient resources to deal with the appeals resulted in delays and caused unnecessary distress and hardship to claimants.

Better use of data to identify patterns and trends in claimant behaviouris crucial.

HMRC also needs to improve its understanding of why claimants do not always report changes to their circumstances as this is when the majority of error happens.