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UK Committee Condemns HMRC For Tax Credit Contract Failings

by Jason Gorringe, Tax-News.com, London

05 December 2016


A UK parliamentary committee has censured the UK tax authority and its former contractor Concentrix over "gross failings" in relation to the administration of tax credits.

A report from the Work and Pensions Committee found that the decision-making process for investigating potential fraudulent tax credit claims was "flawed" and left vulnerable people in "humiliating hardship."

Concentrix was contracted by HM Revenue and Customs (HMRC) in May 2014 to provide additional capacity and expertise to check for possible fraud and error in tax credit claims. This was the first time a private company had been delegated such a degree of decision-making responsibility for UK benefit claims. In September 2016 HMRC announced it would not be renewing the contract and took much of the work in house. HMRC has since processed the majority of appeals against Concentrix decisions. In November 2016 HMRC announced the existing contract had been terminated.

The Committee says a flawed decision-making process left vulnerable people in humiliating hardship while Concentrix and HMRC targeted "strike rates" of benefits being removed. 90 percent of those decisions were overturned on initial appeal, said the committee, yet in many cases people lost benefits for months, being forced to borrow money and use food banks to survive.

The Committee said collapse of the Concentrix contract was much more than "a gross failure of customer service." It said "the whole system was stacked against claimants who were guilty until they could somehow prove themselves innocent."

"The Committee was horrified to learn of the 'cut first, think later' approach that was deployed by Concentrix," said Frank Field MP, Chair of the Work and Pensions Committee. "Our horror was compounded by the company's – and HMRC's – apparent celebration of its 'strike rate' in cutting families' tax credits."

"Although the Committee welcomes HMRC's decision to bring in house its tax credit compliance functions, we are clear that this will not automatically deliver a better service," said Field. "Nor are those families driven into debt going to be rescued from the plight into which this sorry episode plunged them."

TAGS: compliance | tax | law | United Kingdom | tax credits | HM Revenue and Customs (HMRC) | HM Revenue and Customs (HMRC) | Pensions | Work | Pensions

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