Committee of Public Accounts Press Notice



National Audit Office report: HMRC Standard Report 2006-07

During the year 2006-07 HMRC paid out £18.7 billion in tax credits. According to latest estimates, the amount being lost to fraud and error is running at a staggering billion pounds a year. HMRC was forced to close the tax credits internet site following attacks by organised criminals, but even so the Department still lost £40 million in the year to organised fraud. Taxpayers’ money is being wasted hand over fist.

That’s before we get to the amount of overpayment to claimants. Of course, the tax credits system was designed to incorporate a measure of overpayment given that initial awards are provisional. It is the scale of overpayment that takes the breath away - £6.6 billion since the scheme was introduced in 2003. Well over half of this sum, £3.9 billion, remains to be collected. And HMRC reckons that £1.6 billion will never be recovered.

There are no winners here. To the tax payer it means a torrent of wasted money. To vulnerable families who have been overpaid, it means a future of almost certain hardship repaying debt to the government.

HMRC’s mistakes do not end here. The Department turns out to have provided incorrect advice on the taxation of small pensions. The amount lost to the Exchequer each year is running at £135 million.

The reputation of HMRC for competence looks increasingly threadbare as revelations of this kind become public.

Notes for Editors

Requests for further comment from Edward Leigh should be made via Alex Patterson, Select Committee Media Officer, on 020 7219 1589 or 07917 488488