MPs’ report backs LITRG call for independent tax credits review

The Low Incomes Tax Reform Group (LITRG) have welcomed today’s report by the Work and Pensions Committee which supports our recent recommendation for an independent review of tax credit compliance processes and highlights the many flaws in the manner in which HMRC investigate tax credit claims.

Over the summer, tax credit claimants faced significant delays getting through to Concentrix, the private company hired by HMRC to carry out tax credit checks on their behalf, which led to HMRC terminating the contract early.

Today’s report acknowledges the customer service failures by HMRC and Concentrix and the poor handling of the contract by HMRC, but also highlights other flaws in the compliance processes that left claimants facing a ‘decision making system stacked against them’.

Anthony Thomas, Chairman of LITRG said:

“HMRC have a duty to ensure that people receive the right amount of tax credits and compliance checks are an important part of that process. It is therefore worrying that, as stated in the Committee’s report, due to customer service failures and flawed decision making processes, vulnerable tax credit claimants have lost tax credits to which they were entitled, and some claimants have been put through the most traumatic experiences as a result of these avoidable failures.

“Although HMRC have now ended the contract with Concentrix and dealt with outstanding appeals against Concentrix decisions, the report brings to light serious issues surrounding HMRC’s handling of the contract from beginning to end. We are hugely disappointed by HMRC’s decision to prioritise the maximisation of expenditure savings over ensuring the processes were fair to claimants, proportionate and driven towards ensuring the correct decision was made in each case. HMRC must publicly take responsibility for these failings and for their significant contribution to the problems that occurred which were not wholly down to Concentrix.

“Lessons must be learned from the handling of the contract, but more importantly all wrong decisions must be corrected so that no claimant suffers detriment in the longer term. HMRC’s priority in the short term should be to without delay and consider the points raised in the Committee’s report, particularly the recommendation that HMRC review all Summer 2016 Concentrix decisions not already appealed. We would add a strong recommendation that HMRC’s own cases be similarly reviewed given they followed the same processes.

“HMRC should then commission an independent review of the end to end tax credits compliance process before any further large scale compliance exercises are carried out. This will allow HMRC to identify and make changes that will improve the process for the future, leading to better customer service standards and better quality decisions. The situation that arose this summer must never be repeated.”

Notes for editors

1.       LITRG’s briefing on tax credits compliance processes, which was sent to the Work and Pensions  Committee, and is quoted extensively within it, is now available at http://www.litrg.org.uk/latest-news/submissions/161201-management-tax-credits-compliance-cases

2.       Low Incomes Tax Reform Group

The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: George Crozier, Head of External Relations (gcrozier@tax.org.uk; 020 7340 0569 or 07740 477 374)