Fraud prompts closure of online tax credits form

The online application process for tax credits has been suspended after it was found to have been used to make fraudulent claims.

HM Revenue and Customs has launched an investigation into how this happened but has temporarily closed the e-portal through which online applications are made.

A spokesman for the Department for Work and Pensions (DWP) insisted this was just a precautionary measure, and reassured claimants that they could still apply for tax credits in the meantime by writing, visiting local inquiry centres or via the telephone helpline.

“We have a number of sophisticated IT tools to detect attempts by people to claim tax credits to which they are not entitled,” he told politics.co.uk.

“As a precautionary measure we have decided to suspend this service while we examine the system and implement any necessary changes.”

The announcement comes just weeks after a public accounts committee report criticised the “astronomical” amount of benefit money being lost through fraud and error at the DWP.

Research by the group of MPs found that about £2 billion of the £3 billion of benefits lost in each of the three years up to 2003-04 was through fraud.

Responding at the time, anti-fraud minister James Plaskett said that the DWP took these criticisms “very seriously” but insisted fraud was at its lowest level ever thanks to better investigation techniques.

In addition, the department was looking at new ways to “track down the cheats”, he said, such as using credit reference agencies and voice recognition technology.

Announcing the closure of the e-portal this morning, a statement from HM Revenue and Customs said the fraud has been identified as part of its “ongoing compliance work”.

“In the light of this, HMRC has closed the e-portal while it develops new checks to ensure that the system remains secure,” it said.

However, Lib Dem work and pensions spokesman David Laws said the news was a “huge embarrassment” for the chancellor ahead of Monday’s pre-Budget report, adding that it was further proof that the benefits system “is in chaos”.

“This complicated and chaotic system is wide open to fraud. Ministers have known for some time that organised criminals were using the internet to defraud the system,” he said.

“Ministers must now make a statement on Monday, firstly as to why they have taken so long to deal with the problem and why such drastic action is necessary.

“After all, many perfectly honest families will be applying via the internet and will be forced to join the massive queue of people hoping to speak to an adviser on the tax credit helpline.”