By Andy McCue, 5 December 2005 15:40
NEWS
The government has come under fire after it emerged ministers have known for months that criminals were using stolen identities to make £30m of fraudulent online tax credit claims.
HM Revenue and Customs (HMRC) was warned about the flaw over six months ago but only closed the tax credit portal down last week after it discovered criminals had used the identities of 1,500 civil servants at the Department of Work and Pensions (DWP) to make fraudulent claims.
The tax credit website handles around half a million transactions a year and the fraudsters were able to change claim details and redirect the money into their own bank accounts by getting hold of a genuine claimant's name, date of birth and national insurance number.
The latest fraud involving innocent staff at the DWP only came to light during compliance checks by HMRC, and MPs have been told the tax credit website has been hit by over £30m of fraudulent claims.
The police have now been called in and a spokesman for HMRC declined to comment further while the criminal investigation is ongoing - but said the tax credit website will remain down until the review of its security is completed.
Liberal Democrat Work and Pensions secretary David Laws slammed the government and said ministers must make a statement as to why they took so long to take action to stop the fraud
He said: "This complicated and chaotic system is wide open to fraud. Ministers have known for some time that organised criminals were using the internet to defraud the system."
The debacle is yet another embarrassment for the government's flagship tax credits programme, which has suffered from problems since it was launched in 2003. Much of that has been down to an IT system described as a "nightmare" by MPs. EDS was last month forced to shell out £71m to HMRC to settle the dispute over problems with the tax credits IT system.
Comments
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1. Richard
Blunkett's Legacy?
Is this another legacy of the chaos surrounding Blunkett's time as minister?
Gordon Brown's complicated taxes and benefits have such a very poor track record for efficiency and fairness.
Yes, the IT systems may be badly designed and run, but Gordon Brown's over-complicated and ever changing taxes & benefits are at the root of most problems.
2. Martin Lukes
They must need identity cards. That would stop fraud instantly. And terrorism as well. The Prime Minister says so. And he would not lie, especially after God told him and his mate what to do.
3. Nick Moulsdale
IT is not the answer.
When will this shower realise that IT is NOT the answer to everything. That £30m would have paid for a lot of people working at local job centres to interview Tax Credit Applicants. Fraud would still be possible, but much harder.
Face to Face interviews of all benefit claimants with a US style of finger print and photo (as when entering US) would soon stop a lot of this. And it would remove need for ID Cards!
4. Nigel Perry
I don't know why people winge about this. Here at last is an area in which Britain excels. Intelligent fraud contributes at least £70bn to the economy and sustains huge industries in the security and media sectors, not to mention certain highly respected websites.
Being the jealous type I would certainly put a stop to it though. It is time to bring back capital punishment for acts of treason, then declare fraud committed against HMG to be an act of treason. Leaving deposits of chewing gum on footpaths could be slid in there somewhere, I expect ....
Meanwhile: think what those criminals could do if they were running our industries - presuming that they are not, that is. If threatened with amputation by pruning shears of one digit per crime perhaps they would go straight and repair our pensions deficit! Time for some lateral thinking, chaps.
5. anonymous
Well that's less than 1% of the cost of the non-compulsory ID cards we appear to be misdirected into agreeing to have,
We will, according to reports and discussions I have read, not need the new ID cards unless we want to:
Get a job.
Pass through (major) railway stations. Apply for tax credits?
Set up and manage a company?
Attend a government 'employment'/unemployment & Benefit centre.
Travel past?, or near? an airport.
Enter a bank?
Try to get a driving licence?
Bother to register the ownership of a vehicle?
Apply for credit?
Get a registered letter from the post office?
Travel on major railway or ferry routes such as to the continent.
Another thought:
Will the foreign authorities (e.g. Turkish) have access to the database,
I take it as a given that the USA will, they will probably (via EDS?) have authority to change, and even override the UK input and access.
6. Paul Wilson
And YOU think that the ID Card system will be any safer???? Think again. There is too much complacency and reliance on the internet for people to be able to access freely. Government systems should be kept off the Internet.
7. anonymous
More face to face interviews are required within this area. This already happens when people apply for NI numbers in the UK. I conduct on average 10 Evidence of Identity interviews per day, and on average "pull" (for pull read implement the arrest on site) one client every fortnight. Proves that face to face is the only way these days. Sad that my own dept can't keep my own NI details secure though, as we have nearly all found our details to have been fraudulently used... the irony is not lost on us...