Fraud-hit tax credits website to remain closed

The tax credits website closed down by ID fraudsters in 2005 will not be back online before next summer at the earliest - and may never be reopened, the government has admitted.

The HM Revenue & Customs (HMRC) 'e-portal' was targeted by criminals who stole the identities and personal details of almost 13,000 staff at the DWP (Department for Work and Pensions) and Network Rail and exploited poor security and ID checks to make fraudulent online claims for tax credits.

The government's Paymaster General responsible for the tax service told MPs at a Parliamentary Treasury select committee hearing last week that the tax credits website will not now be re-opened before next summer - almost three years after it was shut down.

silicon.com Public Sector

Get the latest public sector news straight to your inbox. Sign up for the PS newsletter today!

Dawn Primarolo said: "The department advised me that by the summer of 2008 the necessary IT and identification checks built into the system will be available and it could reopen then."

But she also acknowledged concerns from MPs on the committee that the website is too high risk to ever be reopened.

She said: "My judgment is that without proper identification checks on the e-portal it should not be reopened."

MPs also criticised HMRC for ignoring advice and guidelines from the Office of the E-Envoy on setting up a secure government service online.

Sarah Walker, director of benefits and tax credits at HMRC, said the department took the approach it would monitor the website closely for signs of fraud. "We were trying to strike a balance all the time between making the system as accessible as we could for genuine claimants at a stage where this was a new system and we were trying to make it easy for people to get into it while monitoring any signs of persistent fraud in the system," she said.

During the hearing, HMRC officials claimed the department's IT systems are stable and "working well" but admitted there are "still more day-to-day problems than we would like, which affect individual cases".

One of the most recent problems with the tax credits IT systems is HMRC staff being forced to make manual payments as a result of an IT upgrade last November. Around 11,000 payments have had to be made manually because of that IT problem, which is due to be fixed in April.

HMRC negotiated £71.25m compensation from EDS over the litany of problems with the tax credits IT system the US IT supplier developed to support the launch of tax credits in 2003, which were designed to help low income families back into work or after the birth of a child.

But parliamentary spending watchdog the National Audit Office slammed the compensation deal when it emerged EDS has paid only £26.5m, with the rest dependant on the IT company winning future contracts from the government.