Tax Fraud Call to plug credit loopoles

The working family tax credit could be open to even wider abuse and fraud than family credit, according to the Commons Social Security Committee.

A committee study has revealed more than a third of family credit payments involved actual or possible fraud. The credit, a means-tested benefit which goes to families on low incomes but is paid direct to the mother by giro, is to be replaced by the WFTC in October.

The study indicated that 123 out of 326 cases involved possible or actual fraud. Confirmed fraud was found in 32 cases, and low or high suspicion of fraud in 91.

Most were related to false declaration of earnings. The government said it never intended to release the findings as the sample was too small and not statistically valid. But MPs called on the social security department to tighten controls for the new credit.

The results emerged as the Benefit Fraud Inspectorate and Audit Commission signed a memorandum of understanding to reinforce their commitment to working with local authorities and government agencies to counter benefit fraud.

Under the agreement, BFI inspectors and commission auditors will collaborate and avoid duplicating roles.