The NAO’s powers were recently extended to allow the spending watchdog automatic right of access to documents on contracts with private companies, but the regarding government contracts with private companies, but MPs want to see a further extension of the watchdog’s authority.
Edward Leigh, chairman of the powerful Commons Public Accounts Committee, said: ‘Tax Credits are a form of payment authorised by the Inland Revenue and the audit arrangements for them should be no less rigorous than for any other payment.
The department should act swiftly to rectify this anomaly, particularly as they have been unable to reconcile the payments made.
As they stand these arrangements leave a significant gap in the system of control over public funds.’
Tax credits amount to around £4.7bn a year, a third of which is paid by employers on the Inland Revenue’s behalf.
The NAO revealed it is not seeking these added powers but there is clearly a growing demand among MPs that tax credits be opened up for the watchdog’s inspection.
Indeed it is understood that the Revenue does its own reconciliation of tax credit information.
The Treasury appears to ignoring demands from MPs on the PAC.
It claims that it has ‘noted’ the committee’s complaint.
Derek Brownlee, a tax specialist at the Institute of Directors believes one of the reasons why the Treasury will not grant extra powers to the NAO, is because tax credits are ‘very much Gordon Brown’s pet project’.
‘To give the powers to NAO might be to suggest that they are not being paid correctly, or that there are problems in the system. They might not want to concede that point,’ he said.
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