Tax credit claimants who had payments wrongly stopped by fraud-busting firm Concentrix have received almost £87,000 in compensation from HM Revenue and Customs, a report has revealed.
Some 35,000 people whose tax credits were cut off or changed by US operator Concentrix later had their cases overturned on appeal, a report published today by the National Audit Office (NAO) spending watchdog has found – almost a third of the 108,000 total.
Many of those left out of pocket when payments ended then struggled to reach Concentrix to discuss the problem, the report added.
By mid-December last year, HMRC had paid out £86,815 in compensation payments to claimants mishandled by Concentrix, including almost £68,000 for worry and distress caused.
The tax credit administration shambles emerged last August when large numbers of claimants told how their payments were being adjusted or stopped by Concentrix – in many cases because it mistakenly suspected them of living with a partner. In one particularly bizarre case, a woman was reportedly left reliant on food banks after the firm accused her of cohabiting with 19th century philanthropist Joseph Rowntree.
What was Concentrix hired to do?
In November 2014, Concentrix was hired by HMRC to reduce fraud and error in the tax credit system as part of a three-year deal. But the deal was brought to an early end just two years later as a result of the problems.
During the two-year life of the contract, Concentrix saved the Government less than a fifth of the £1 billion in savings originally estimated. The contractor was already failing to meet half its targets less than a year into the deal, the NAO said.
In light of the problems, HMRC has now vowed not to outsource tax credit investigations again and will instead keep them in-house.
What does the report say?