HMRC has now agreed to review all the cases passed over to outsourcer Concentrix which resulted in a claimant’s tax credits being amended or terminated, as recommended by the work and pensions select committee’s inquiry into the highly controversial contract which was terminated early in September last year
Of the 59,000 claimants whose benefits were stopped or cut by Concentrix over the life of the contract, 36,000 requested an appeal called a 'mandatory reconsideration', with the committee hearing evidence that 87% of these appeals were upheld in favour of the claimant.
In its recommendations following the inquiry, the committee said it was concerned that the complex and demanding mandatory reconsideration procedure, which HMRC and Concentrix accepted as ‘a routine feature of the process’ was daunting for claimants and there was ‘no doubt’ that some people who wrongly had their tax credit stopped had not appealed.
HMRC has now agreed to look at all of the claims where benefits were reduced or withdrawn, and says it plans to complete this new commitment by March 2017.
The government has also agreed to publicise better the availability of hardship payments for claimants who went into debt as a result of having tax credit payments stopped incorrectly. It acknowledged that there has been ‘an absence’ of such guidance on gov.uk and will publish new content later this month.
In addition, HMRC has committed to detailing the reasons it suspects fraud and error in letters to claimants. One of the committee’s main concerns was that Concentrix did not inform tax credit claimants of the nature of suspicions against them, with claimants left not knowing what they had to prove or disprove, or how. For example, claimants tasked with proving they were single were not told the identity of the person with whom they were suspected of cohabiting. In some cases the person was a former landlord or a dead relative, but the claimant was not given enough detail to resolve the issue.
HMRC has agreed to extend any future deadline for the submission of supporting information by claimants to be extended if telephone handling performance again falls below acceptable levels. It has also begun work on enabling claimants to supply information electronically.
The committee found that claimants were ‘unfairly disadvantaged by the failure of the telephone system’. Less than 1% of calls were answered within the target five minutes on several days in mid-August 2016, following the peak of tax credit renewals, while average waiting times were 30 minutes at other points in the month.
The committee also reported that HMRC is taking independent advice on the next annual tax credit renewal process and will write to them in March 2017 with its proposals for improvements before proceeding. It intended to ‘shift the focus of compliance activity to a greater emphasis on education and preventing error and fraud at the point of entry to the system’.
Frank Field, chair of the work and pensions committee, said: ‘The committee is very pleased that HMRC has accepted our recommendations. HMRC was right to fire its contractor, but many of the processes used by Concentrix were the same as those used by HMRC itself.
‘In particular, the committee welcomes the review of cases where claimants had their tax credits stopped but did not submit a formal appeal. For many claimants, particularly those who were unwell, lacked self-confidence or had caring responsibilities, the document-heavy process of challenging a wrong decision by Concentrix was surely prohibitively daunting. The real answer is of course to root out fraud and error at entry to the system rather than stopping benefits in payment as first resort.’
