A National Audit Office report which has been released this week shows that the Tax Credit System is losing up to £1 billion a year due to fraud and errors.  Those who have had the misfortune to get caught up in the never ending trail of paper, phone calls and differing advice will no doubt be unsurprised by the system.  There have been reports of multiple offers, each differing greatly in size, information missed, back payments reclaimed and so on, the list is endless.  However, the system plays a major part in assisting those less fortunate than many in society, so what can be done to make it work?

Unfortunately is seems that a mixture of bad training, a lack of communication and a computer system which is being pushed to the brink have all contributed to the problems.  It is therefore no surprise to find that the system has, and continues to be, a major target for the fraudsters and the mis-claimants.  By the time the authorities find out that they have a problem, and contact the fraudsters, they will be long gone with their payments cleared and buried away.

Bad debts have also been a major problem, but when you bear in mind that some over payments have only surfaced 4 years later, and they are paying out to the needy of society anyway, it comes as no surprise that many people are not in a position to pay funds back .  Figures show that of the £2 billion plus over payments from 2003-04, almost half has still be to recovered. 

The Treasury recently took over the day to day running of the system from the Inland Revenue, a move applauded by many, although just as many are yet to be convinced there will be any change in the level of performance - from an Inland Revenue which sent out inflated tax demands to over 1 million UK residents last year..

The Tax Credit system was a great idea which has been badly let down by the performance.  Quite how the government will be able to get the system back on track remains to be seen, and perhaps more importantly at what cost?

As more and more of the working population feel that they are being taken to the dry cleaners UK tax payers are finally beginning to fight back.