HMRC has axed its contract with Concentrix with immediate effect, six months earlier than scheduled, after a barrage of criticism over the outsourcing company’s poor performance in checking tax credit claims
In a statement the tax authority said: ‘Having evaluated all options available, we have agreed that it would be in both parties’ interests and those of tax credit customers to end the contract early.
In mid-September, HMRC said it would not extend the contract with Concentrix beyond its scheduled expiry in May 2017, and also announced it was bringing the work back in-house and deploying an additional 150 HMRC staff to handle the backlog of cases.
Giving evidence to the Public Accounts Committee (PAC) at the end of October, HMRC chief executive Jon Thompson indicated that an early exit from the contract was likely, telling MPs that customer service had been ‘appalling’.
Announcing the early termination of the contract, Thompson said: ‘This is the right outcome for customers and for the taxpayer. I’m also pleased to receive 250 Concentrix staff, who will help us to deliver our priorities, offering job security to them well beyond the scheduled expiry of the contract in May 2017.’
HMRC said that all 181,000 cases transferred from Concentrix to HMRC have been finalised. MPs at both the PAC and the work and pensions select committees had heard evidence of lengthy delays in case handling by Concentrix, with less than 1% of calls being answered within five minutes’ during the run-up to the tax credit renewals deadline.
There were also instances of tax credit claimants being held on the phone for considerable periods of time, and of Concentrix using incorrect data about whether people were living with partners, resulting in payments being stopped, with claimants waiting months for errors to be resolved.
At the time the contract was set up, in May 2014, Concentrix was asked to look into around 5.5m tax credit awards and identify cases of fraud and error on a ‘payment by results’ basis. The contract was estimated to be worth between £5m and £75m.
HMRC now says that the outsourcing deal secured £193m in estimated savings for the Exchequer, while the amount paid to Concentrix over the life of the contract has been around £32.5m. HMRC stated that payments to Concentrix were reduced where performance and customer service levels were not met.
