Disgrace over £1.4bn lost tax credits

10.32.49am GMT Mon 21st Jul 2008

Money down the drain: £14bn has been lost by the tax credits system since 2003

Almost £1.4bn has been lost though error in the tax credit system in one year alone, a National Statistics document has revealed.

Analysis of the HM Revenue & Customs figures also showed that Tax Credits fraud and error, including overpayments to claimants, cost the public purse over £4bn over in the last two years. This takes the total lost through overpayments, fraud and error to £14bn since Tax Credits were introduced in 2003.

Commenting, Jo Swinson said:

"Another year has passed, and another huge slice of public money has been lost by the Tax Credits system. The £1.4bn lost through fraud and error takes the total since Tax Credits were introduced 5 years ago to a staggering £14bn.

"It is not only the taxpayer who loses out through these errors. Individual families face a financial rollercoaster when they are forced to pay for mistakes made by officials who can't understand the system themselves. In the worst case I have encountered in East Dunbartonshire, a resident was overpaid by £5,300, then told that the money had to be repaid within one year.

"Our hugely complex tax credits system is abused by fraudsters, misunderstood by claimants and mismanaged by officials. Tax credits must be made simpler - we need to return to fixed awards which are easy to administer and ensure families aren't burdened with overpayments."

Related Link:

HM Revenue & Customs fraud and error statistics