Organised tax credit fraud rife

24-08-2006

Forty separate cases of organised mass tax credit fraud are currently being investigated by the government, a letter to an MP has revealed.

Sir John Bourn, comptroller and auditor general of the National Audit Office, revealed to Conservative MP Richard Bacon that the 40 cases are worth over £5 million in value and involved false identities and forged tax credit documents.

Mr Bacon has originally written to Sir John to express his concern over the potential for fraud within the tax credits system, with the government forced to disable the online tax credits facility when staff at the Department of Work & Pensions (DWP) had their identities stolen in 2005.

In his letter, Sir John disclosed that over half of the fraudsters who assumed a DWP member of staff's identity has been able to receive payments.

Although the auditor general explained that he thought lessons had been learned by HM Revenue & Customs and that he future identity fraud breaches were not expected, Mr Bacon remained sceptical.

He claims that the problem of tax credit documents being stolen from employers is not limited to government departments and that many large companies across the country have witnessed their employees' identities being assumed by fraudsters.

"It looks as if the problems with the DWP were just the tip of the iceberg. Apparently, organised criminal gangs have been stealing confidential personal information on an industrial scale, from many different employers," the MP said.

Mr Bacon added that the tax credit scheme itself was under scrutiny again, following last month's announcement that overpayments worth £1.8 billion were made to two million families between 2004/05.

"The appalling design of the tax credits scheme then provides a perfect opportunity for criminal gangs to commit massive fraud. It is quite sick-making and it calls into question the whole basis of the scheme."


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