[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Monday, 16 January 2006, 00:01 GMT
Revenue reveals tax fraud levels
Job Centre plus office
Job Centre staff have been among the victims of the fraud
HM Revenue & Customs halted 38,924 suspect tax credit applications between April and November 2005, the Treasury has revealed.

More than half these cases are believed to have featured attempts by gangs of organised fraudsters to obtain cash.

From October 2004 to November 2005 HMRC also identified and stopped 22,284 tax credit claims at payment.

HMRC was forced to close the tax credit system's online portal on 1 December following abuse by organised crime.

'Persistent attempts'

The credits are intended to supplement the income of families and those on low incomes.

But, as the BBC News website reported in October, organised gangs saw the system as "low-hanging fruit" - a low-risk, high-reward form of volume fraud.

Fraud is carried out using fictitious identities, very often using personal details of civil servants which have been stolen.

"HMRC are aware of persistent attempts by organised criminals to obtain tax credits using stolen or fictitious identities and it monitors payments to detect organised fraud so that any payments can be stopped - and followed up with those responsible," said Dawn Primarolo MP, Paymaster General to the Treasury.

For the year 2004/05 HMRC intervened on 17,164 incorrect claims before the tax credit payments were made where fraud or error was suspected. This figure will be well outstripped by the final figures for 2005/06.

She revealed the figures following questions from the Liberal Democrats.

David Laws MP, Liberal Democrat work and pensions spokesman, said: "This is a huge number of cases.

"It is to be hoped that it doesn't represent the tip of an iceberg, but Revenue officials have openly admitted that they have little idea of the full extent of the fraud - only that they have been subjected to virulent attacks."

He said there needed to be reassurances that security checks had been effectively tightened up and also called for "an urgent, independent investigation into the full extent of the problem".

Court cases

Dawn Primarolo's office said HMRC pursued the most serious cases towards criminal conviction.

HMRC prosecuted 153 individuals in 2004/05 and has prosecuted 159 in the financial year to the end of November 2005. Another 97 cases are currently awaiting court verdicts.

In December HM Revenue & Customs executive director David Varney told MPs that as many as 13,000 civil servants' personal information had been stolen as part of "virulent" organised fraud of the tax credit system

Criminals made multiple online applications using false and stolen identities and took advantage of limited checking of online applications.

The losses identified to date amount to 15m, Mr Varney said, although many experts believe that accounts only for positively investigated cases - and Mr Varney acknowledged that HMRC was "still at a very early stage of knowing what the extent of this fraud is".


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific