Hodge lambasts taxman over fraud progress

by Calum Fuller

More from this author

14 Feb 2013

  • Comments
Margaret Hodge ourcreativetalent flickr photostream

THE TAXMAN has  missed its targets on tackling tax credit fraud and error "by a mile" after National Audit Office findings showed it had cut losses by £500m over two years, instead of £1.4bn as hoped.

Labour MP and Public Accounts Committee chair Margaret Hodge (pictured) branded the figures "deeply worrying", urging HM Revenue & Customs to "get a grip".

In 2009, HMRC set itself the target of pushing the rate of tax credit fraud and error down to 5% from 9%, re-allocating around 400 staff to do so.

However, the NAO noted the rate had only dropped to 8.1% and some £2.27bn had been leaked through fraud and error since 2010/11, adding HMRC had "overestimated the impact of its activities".

The NAO report found the department's strategy had prevented an extra £230m of tax credits being wrongly paid out, highlighting "innovative" steps taken which have begun to glean results.

There had not been much progress in the development of an effective response to stop error and fraud recurring after a claim has been corrected, it said. Nor had enough headway been made in addressing people who failed to declare their partner's income or in checking claimant's stated work hours. The result, it said, was the overpayment of one in five claims.

Head of the NAO Amyas Morse - who last year declined to sign off HMRC's accounts due to tax credit fraud and error - said the body faces "significant changes if it is going to achieve value for money".

He said: "HMRC deserves credit for demonstrating innovation, but it has further to go to achieve sustainable reductions in tax credits error and fraud. To tackle error and fraud effectively, there needs to be an improved understanding of risks and better use of information."

Hodge was more critical, noting HMRC had "set itself a target... which it missed by a mile", adding the department has to "get a grip".

She did, however, welcome "inroads into tackling some categories" and acknowledged HMRC "has tried to be smarter and sharper".

"HMRC needs to develop a rigorous plan for rooting out error and fraud in each and every category if it is to achieve a sustainable reduction in losses", she said.

Visitor comments

blog comments powered by Disqus

Add your comment

We won't publish your address

By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

  • Send



Conservatoire for Dance and Drama, London, Permanent, Part Time, £60,000 pro rata




Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials


Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you



Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.


iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.