TaxPersonal TaxTax credit prosecutions to increase

Tax credit prosecutions to increase

A marked increase is set to take place in the number of prosecutions against those that defraud the government's new tax credit system, according to Inland Revenue chairman Sir Nick Montagu.

Link: Montagu defends mistakes

Sir Nick was responding to angry MPs at a public accounts select committee meeting on Monday. ‘We do expect that tax credit prosecutions will increase,’ he said.

The Revenue was accused by Labour MP Geraint Davies of achieving just one prosecution for every £100m in benefits handed out. ‘It is a relatively new system,’ said Sir Nick. ‘We should be getting a better feeling for how bad the fraud problem is.’ But Edward Leigh, the Tory chairman of the select committee was not impressed. ‘You are not saying that you have things covered. I don’t believe that,’ he said.

Sir Nick has faced heavy criticism in recent weeks over the Revenue’s handling of applications for the new tax credits. Revenue staff mounted strikes claiming they were under-resourced to deal with credit inquiries.

The department was also slammed for failing to pick up adequately on those that take advantage of offshore accounts. Sir Nick insisted that a ‘major part’ of the £66m earmarked by Gordon Brown to be spent on tax avoidance will go towards the scam. ‘(Clamping down on those that use) of offshore accounts is going to be a major part of how we spend that money,’ he said.

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