Organised fraudsters steal millions in UK tax credits

LONDON - Organised fraudsters tried to steal more than half a billion pounds from Britain's tax credit system in 2005/06, figures released today showed.

HM Revenue & Customs (HMRC) said that of the £540 million it knows about, it lost £131 million to fraud, up from an earlier estimate of £15 million.

Some 53,000 fraudulent claims were only discovered after payment - although HMRC stopped 91,000 other attempts.

The Child and Working Tax Credits are designed to assist low-paid workers and families.

The credits, a flagship welfare policy of Prime Minister Tony Blair's government introduced in 2003, are paid to almost 20 million people, HMRC said.

They try to integrate the social security system with the tax system, rather than offering straight handouts.

But the system has been dogged both by fraud and also by overpayments to claimants, which amounted to £1.8 billion in 2004/05.

Organised crime systems infiltrated the system last year when more than 60,000 attempts were made to defraud the tax system's online portal.

Of these 33,000 were successful, at a cost of £55 million. As a result, the portal closed in December 2005.

At the same time, an investigation was launched into the misuse of the identities of some 7,000 employees at the Department of Work and Pensions, and another 4,000 at Network Rail.

- REUTERS