Revenue responds to tax credit attacks

The government halted 38,924 tax credit applications during an eight-month period last year, suspecting that at least half had been submitted by organised crime gangs.

HM Revenue & Customs (HMRC) also identified and stopped more than 22,000 tax credit payments between October 2004 and November 2005, because it suspected organised fraud.

Responding to parliamentary questions from the Liberal Democrats last week, paymaster general Dawn Primarolo said HMRC had detected an increase in the number of organised attacks on the tax credit system in the past year, predominately via its internet portal.

HMRC shut the online tax credit application site last month after discovering that details of more than 1,500 employees at the Department for Work and Pensions (DWP) were being used by fraudsters to try to make false claims (Computing, 8 December).

‘A decision was taken to suspend the internet service from 2 December following an assessment by HMRC that the nature of the threat had changed, which in turn changed the balance of judgement between maintaining the service for genuine customers and the need to protect revenues,’ said Primarolo in a written parliamentary answer.

HMRC and DWP are undertaking a criminal investigation into the high levels of fraud.
But the DWP says its own security breach was isolated to the computer records of Jobcentre Plus employees servicing the London region, including call centre staff based in Glasgow, Makerfield and Pembroke (Computing, 15 December).

The Public and Commercial Services union, which represents DWP staff, says the breach comes from DWP’s 2003/04 payroll system, which held the records of 13,000 employees.

Liberal Democrat shadow work and pensions secretary David Laws has criticised the government’s response to the problem.

‘This is a huge number of cases. It may well represent the tip of an iceberg. 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.

A spokesman for HMRC told Computing the department has ‘robust strategies in place for tackling fraud’, as shown by the fact that it detected and stopped the attacks in the first place.