£15m+ lost in tax credit fraud
Government payroll records used to steal IDs
HM Revenue & Customs estimates crooks have made off with at least £15m after defrauding the tax credit system by making false claims in the name of job centre workers. The estimate came when HM Revenue & Customs executive director David Varney appeared before the House of Commons Public Accounts Committee on Thursday to answers questions from MPs over an attack on the revenue which is far worse than first suspected.
HM Revenue & Customs shut down its tax credit portal website at the start of December after uncovering an attempt to defraud the system using the identities of Department of Work and Pensions (DWP) staff. Varney said the fraud against the tax credit systems was enabled by illicit access to government payroll records. This illegal access was likely facilitated by corrupt insiders.
Initially it was thought that up to 1,500 job centre workers might have had personal information stolen. Now it is feared that up to 13,000 job centre staff might have been exposed to attack. Fraudsters are reckoned to have secured the National Insurance numbers, names and dates of birth of thousands of job centre staff working in London, Glasgow, Lancashire and Pembrokeshire.
The information obtained was enough to make fraudulent tax credit claims redirected to false addresses and accounts controlled by crooks. False claims of up to £1,000 a year appear to have been siphoned into fraudsters' bank accounts. Crooks took advantage of a lack of comprehensive checks of online applications to make an easy killing. Varney told MPS that losses identified so far come to £15m, a figure that's likely to rise since the revenue is only at an early stage of investigating the scope of the fraud. A criminal investigation has begun into the case.
It's not the first IT-related crisis to hit the tax credit system, which was established in its present form two years ago as a means to pay supplements to families on low incomes. EDS was fired by the revenue after the system it put in place degenerated into chaos, with families being over-paid credits, only to be hit with big claw-back demands from the government department. The National Audit Office claimed in October that mistakes by claimants - along with fraud - had resulted in over payments of £460m. ®