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Tax campaigners welcome tax credits review announcement

The Low Incomes Tax Reform Group (LITRG) have welcomed HMRC’s commitment to carry out a review of all summer 2016 decisions made by Concentrix that have not already been challenged by claimants and to improve their compliance processes for 2017 and beyond.

In December, the House of Commons Work and Pensions Committee supported LITRG’s call for an independent review of tax credit compliance processes following significant delays and difficulties faced by tax credit claimants trying to deal with Concentrix, the private company hired by HMRC to carry out tax credit checks on their behalf. This led to HMRC terminating the contract with Concentrix early and taking back outstanding cases.

The Committee’s report acknowledged the serious customer service failures by HMRC and Concentrix but also highlighted other flaws in the compliance processes that left claimants facing ‘a decision making system stacked against them’.

The Government’s response to that report, published today, commits to carrying out a review of the remaining cases where Concentrix amended or terminated a tax credit award but where the claimant did not request a mandatory reconsideration (the first step in the appeals process). Although they have not gone as far as commissioning an independent review of tax credit compliance processes, HMRC have committed to closely examine their processes to ensure that the issues that arose last year are not repeated.

Anthony Thomas, Chairman of LITRG said:

“We welcome the HMRC commitment to review all of the summer 2016 Concentrix decisions that have not already been appealed. We would strongly recommend that other Concentrix decisions, as well as HMRC’s own compliance decisions, should be similarly reviewed where the same flawed processes were followed.

“Whilst it is disappointing that HMRC will not be commissioning an independent review, we are pleased that HMRC have committed to improving the processes for 2017 including giving consideration to further safeguards before payments are altered or suspended. HMRC will be involving their independent stakeholder group, of which LITRG are members, in this work and we very much look forward to working with HMRC to ensure all parts of the process are closely examined and significant improvements made.

“HMRC have a duty to ensure that people are paid the right amount of tax credits and checking claims is an important part of this process. HMRC have so far tackled error and fraud in the tax credits system by investigating claims after payments have been made and have repeatedly missed opportunities to educate claimants and to design processes that stop error entering the system in the first place. We welcome HMRC’s response that acknowledges this and commits to exploring options over the next 12 months to shift the focus of compliance activity to education and preventing error and fraud at the point of entry to the system.

“What happened last year, where vulnerable tax credit claimants were left without essential payments to which they were legally entitled, cannot be allowed to happen again. HMRC’s commitments in response to the Work and Pensions Committee are a good start in preventing a repeat, but there is still much work to be done in order to improve the claimant journey and ensure that the decisions made are the right ones based on sound evidence.”

Notes for editors

1.                   LITRG briefing to WPC http://www.litrg.org.uk/sites/default/files/files/1610-LITRG-briefing-HMRC-management-TC-compliance-cases-FINAL.pdf 
Government’s response to WPC: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmworpen/1006/100602.htm 
WPC original report: https://www.publications.parliament.uk/pa/cm201617/cmselect/cmworpen/720/72002.htm

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, 0207 340 0569 or 07740 477 374; gcrozier@tax.org.uk)

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