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HMRC and Concentrix discuss ‘early exit’ as NAO launches inquiry

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HMRC IS NEGOTIATING with Concentrix for an early exit from the tax credits contract due to run until May 2017, financial secretary to the Treasury Jane Ellison told MPs during a three-hour House of Commons debate on 26 October.

The taxman has been under intense parliamentary scrutiny for the past 48 hours. It faced a Public Accounts Committee session on its performance, concurrent with the commons debate; and yesterday was quizzed by the Commons Treasury Committee over tax credits.

Concentrix

MPs called on the government to conduct a “comprehensive” investigation into Concentrix’s performance under the contract, to include consideration of the potential effect on other HMRC services, and approved a motion calling for “urgent action” to compensate people who have tax credits withdrawn incorrectly.

Ellison told MPs that HMRC staff had stepped in to reinstate a quality customer service, “such as making sure that people could once again get through on the phones”. HMRC took back  181,000 “incomplete cases” from Concentrix and has finalised 178,000 of them, she said, adding that the department should conclude the remaining cases by the end of October.

Chris Law MP said it was “startling” that 98% of cases had been resolved within four weeks. The cases were resolved “according to the facts provided and in the knowledge of the person concerned”, Ellison replied. “We may be able to provide a breakdown at some point, but I am not in a position to do so today.”

Ellison added: “As HMRC announced on 13 September and I confirmed the following day, [the Concentrix contract] will not be renewed beyond its end date in May 2017, nor will any further procurement exercise for tax credit checks be taken forward at that time … I can confirm that HMRC is in discussion with Concentrix to agree a negotiated early exit from the contract.”

Ellison expected the negotiations to be finalised “shortly”. She reiterated that “front-line Concentrix staff have been working hard to resolve these issues”.

Rebecca Long Bailey, Labour MP and shadow chief secretary to the Treasury, told the debate that the National Audit Office (NAO) has told the Labour party that the Concentrix contract merits further investigation. “I am pleased that the NAO will investigate, but the government must carry out a full and transparent inquiry of their own,” Long Bailey said.

Ellison said: “Far from saying that this is all Concentrix, I think there are lessons to be learned all round … for HMRC, for ministers and certainly for Concentrix.” HMRC will look at how the contract with Concentrix was managed, she added, and will co-operate with the NAO “very closely”.

Winding up the debate, economic secretary to the Treasury Simon Kirby acknowledged that a great deal of worry and distress was caused to “the often vulnerable people” who claim tax credits.

In yesterday’s Treasury committee, HMRC chief executive Jon Thompson (pictured) said the department “will not be going back to the market” for assistance in handling tax credit claims.

Brexit

Meg Hillier, chair of the Public Accounts committee, asked Thompson during a 26 October hearing on HMRC performance whether the department has the capacity to deal with replacing the Aspire IT contract, office restructuring, the impact of spending review cuts and the challenges set by Commons select committees.

“All the targets we have for running and delivering the business, plus changing it, plus Brexit, do add up to a very significant agenda,” Thompson replied.

There are eight “Brexit questions” for HMRC, he said. As well as customs issues, there are questions about excise, VAT, social security, direct taxes and state aid, information exchange with EU countries, tax litigation, and the impact of Brexit on HMRC’s business customers and “what impact does that have on their relationship with us?”.

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