Easy Pickings

HMRC has a wonderful system of doling out tax credits. You get to tell them how much you think you will earn this year and they give you the money now. Easy peasy.

The only subtle flaw comes when either they cock it up, or you earn more than you thought you would. The nasty side effect of this subtle flaw is that HMRC come pounding on your door asking for all their money back. Trust me, "Sorry, I've spent it", really won't go down well as an answer.

Of course those of you with a more devious bent will probably have spotted the other nasty side effect of this subtle flaw:

Tax credits are intended to help people on low incomes or with families.

But they have been widely criticised for frequently paying out too much money, then clawing it back - often leaving families in financial trouble.

The culture of overpayment has left the system wide open to abuse by gangs who usually engage in benefit fraud, police sources have told BBC News.

"Do more security checks!", I hear you shout...

The National Audit Office's annual review of HMRC, published earlier in October, found that more than 80% of investigations into possible fraud or error were carried out after an award had been made because "information on some risks was not available at (the pre-award) stage".

I assume they mean information like... Do you actually live at this address? Are you who you say you are? Is this really your bank account? This is all "bread and butter" stuff for financial institutions, mortgage lenders and loan companies, so why does HMRC find it so difficult?

HMRC's Special Compliance Office - which normally deals with suspicions of high-value tax evasion or fraud - had intended to deal with any fraud case worth more than £1,500, the NAO said.

But it warned that the office had been swamped, and had passed the cases back to local tax offices.

The words: locking, horse, stable door, bolted and after spring to mind.

The NAO report continued: "The department have evidence that tax credits have been targeted by organised criminals, particularly where they can make claims over the internet without providing identity.

Oh dear. I can hear the clarion call for ID cards already... "If only we had ID cards, this sort of thing would never happen". That argument completely disregards the fact that the system is a complete festering pile of crap in the first place.

"The department's Internal Audit Office concluded that there was a lack of comprehensive information to allow a robust analysis of the problem."

Roughly translated: "Please don't ask us how much we have lost, because we don't know"

I am going to petition the BabelFish website to add an option to translate "New Labour Spin" into "English". I'm sure it would become an invaluable resource to journalists. Imagine the time they would save going from "What he said" to "What he really said".

Filed under: Politics, New Labour Spin