HMRC to handle tax credit system in-house after Concentrix contract ends

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People claiming tax credits will not have to deal with an outside company in future, the revenue body has said, following complaints that claimants' payments were wrongly cut.

HM Revenue and Customs (HMRC) chief executive Jon Thompson told the Treasury Committee that the revenue body will not be looking for a third party to help it "in any way" with the tax credit system, after deciding not to renew its contract with Concentrix.

The business services firm was brought in to cut fraud and error in the benefit system, but there were complaints that claimants wrongly had their benefits cut and people were unable to get through on the phones.

Mr Thompson told the committee that a fundamental issue appeared to be not having enough people on the telephone lines to answer the telephones.

He said problems with people struggling to get through on the phones started in mid-August - but he was not alerted until three weeks later, on September 5.

He told the committee: "There's a lesson there in that it took three weeks to get to me. But once we stepped in... we deployed extra HMRC staff."

The committee heard there had been stories about people trying to call 60 or 70 times, and that vulnerable claimants included people fleeing violent partners and people whose children have disabilities.

As well as putting extra staff on phone lines to sort the situation out, HMRC also took all new work away from Concentrix and 181,000 incomplete cases were transferred back to HMRC.

Some 178,000 of these cases have now been completed, the committee heard.

Mr Thompson said: "We will not be going back to the market to seek a third party to help us in any way with the tax credit system." 

In the longer term, the tax credit system will be replaced by Universal Credit.

Raising concerns about the "vagueness" of some of the replies received during the hearing, committee chairman Andrew Tyrie pressed Mr Thompson on whether HMRC should launch its own internal inquiry into the matter.

Mr Thompson said: "My priority is to sort this out for customers," later adding: "Let me have a think about it."

Mr Tyrie urged him to do so, saying: "We're not at the point where we're requiring it, but we may be, we'd like you to think about it very carefully."

The National Audit Office has already indicated it will investigate the contract between HMRC and Concentrix.