UKauthorITy.com reports that Cabinet Office minister, Francis Maude, in an interim report has claimed that steps taken to tackle fraud worth £21BN a year across the public sector had saved £12M in their first few months.
Maude said that eight pilot projects had had shown "immediate and startling results" and signalled the end of the "pay first, check later" culture.
One of the projects involved HMRC, which spent (Maude uses the Gordon Brown weasel word "invested") £1M on an "innovative" screening technique for tax credit applications. The tool analyses information provided by prospective claimants on their tax credit application form, compares this against internal and external data, from credit reference agencies for example, and decides the likelihood of the application being fraudulent.
"HMRC piloted the exercise on approximately 4,000 new tax credit applications to test proof of concept and subsequently piloted the new process preventing losses of £10.63m between September 2010 and March 2011".
That seems to be a positive result. However, there still appear to be fraud issues in other areas that need to be addressed.
The ICAEW report the following:
"We have just been advised by one of our members that self assessment tax return fraudsters have struck again...
..the fraud involves repayment claims which are submitted to HMRC online using valid log in details and passwords, requesting payment to a third party bank account."
This chimes with an email I received recently from a loyal reader, who advised me that 91 of his accountant's files had been hacked (it is not clear as to whether the security issue is a failing of an HMRC system, the Government Gateway website or at the accountant's office). I reproduce the text of his email in full:
"We recently returned from holiday to the news that 91 of our accountant's client accounts had been hacked at the HMRC Government Gateway Website, in short hackers had accessed information on 91 individuals or organisations and had entered false end of year accounts in order to claim Self assessment refunds.
The individuals responsible for the aforementioned fraud had managed to set up 91 separate accounts in various banks in the UK and had provided HMRC with the false account numbers and sort codes in order that payments were made direct.
Our accountant spent days talking to HMRC officials advising them of the fraud and I tried constantly to contact them at .70 pence per minute to no avail, I telephoned the police at both Peterborough and Scotland Yard who both said "well it's not your money why worry".
I contacted a corporation tax official who was horrified and did what she could but hit a brick wall, the National Fraud helpline were unable to help and my MP (name supplied) did not have the decency to respond to either my telephone call or my e mails.
Well guess what, we then received a letter from HMRC to advise us that the refunds were on their way to what we knew were false accounts, they actually paid out, HMRC now apparently know what they have done but to add insult to injury they have now started to send demands for repayment to the people who's accounts had been hacked, I myself received one this morning.
This is my last attempt at bringing this matter to light.."
In a further update, it seems that HMRC have now admitted that my loyal reader owes them nothing.
The above indicates that, whatever Maude says, there are still issues that need to be addressed.
Tax does have to be taxing.
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HMRC officers will no doubt be aware of stuff like this but won't bother to nip it in the bud.
ReplyDeleteFor why?
Let it run and build up then when the figures are sufficient they will say:
"See we told you, there's fraud everywhere and your computer systems are sh1t. You need more people. Start hiring immediately."
Budgets Increased. Staff Increased. Empire Increased. Good reasons not to follow the rule of lawa nymore and make loads of busts.
You may ask:
"But... Doesn't the taxpayer lose?"
That doesn't matter you see the "taxpayer" funds the people who pay taxes anyway and HMRC represent the "taxpayer".
Life in the UK is strange to say the least.
15.04 - Ha ha ha, that's pathetic. If you think staff at the HMRC really think like that, you need to see a psychiatrist.
ReplyDeleteBent over and waiting is 100% correct.
ReplyDeleteThere is a prevailing thought process in HMRC that says "can't do" rather than "can do".
Staff are like automatons and don't give a feck and you can't blame them really.
And its true throughout, with no accountability and a system paid for by the taxpayer, they don't have to care.
Trying to get the Glorious 103rd to pick up and run with another fraud is harder than levitating an elephant.
They are so overloaded with fraud they can't take anything else on without dropping something in the process.
Anything that does not fit the desired pallette, vision, spreadsheet, risk profile etc. does not get attention.
Today they published their top 50 risk areas, it would be interesting to see the cost of this overdue missive as you didn't need to be a rocket scientist or an analyst to read the newspapers, scan the web or use a bit of judgement to work out where the problems are.
The online filing service front end has been bolted on to a backend that is 15 years old, it is not built to defend against online fraud attempts and the policy seems to be to deal with these in hindsight.
ReplyDeleteEither the online front end needs intelligent analytical software to prevent fraud attempts or the backend needs to be programmed to stop a repayment where the bank details on an internet filed return are clearly false and I dunno maybe generate a phone call to the contact number asking to confirm the name of the recipient or something?
I know that's not foolproof but I'm no online security expert.
The Organised Crime Gangs have worked out exactly where the weaknesses are by a variety of methods.
ReplyDeleteOne of the most basic being trial and error.
HMRC systems are useless at identifying what is going on and so slow in reacting that the opposition has moved on 3 times before they realise their systems have yet again been funding big crime.
Protecting the Revenue, no, its more like the big giveaway with no cover from the Department set to protect it.
Tax needn't be taxing, not for the fucking criminal it isn't.
All very interesting points.
ReplyDeleteThe online filing service front end has been bolted on to a backend that is 15 years old, it is not built to defend against online fraud attempts
hmmm sounds like your computer systems are sh1t? yes?
They are so overloaded with fraud they can't take anything else on without dropping something in the process.
Anything that does not fit the desired pallette, vision, spreadsheet, risk profile etc. does not get attention.
Need more staff by any chance?
The Organised Crime Gangs have worked out exactly where the weaknesses are by a variety of methods.
We know are computer systems are shit so we'll let it run until they give us loads more resource to sort it out.
I guess you're right guys. It's just not the fault of HMRC and neither was London City Bond, MTIC or tax credits. You'd have to be a genius to have seen those coming?
@9 June 2011 21:16
ReplyDeleteYour attempts to goad HMRC staff on this very serious matter are unproductive and ultimately will not succeed.
Keep your friends close but your enemies closer.
The first comment here made an assertion. Within 4 posts HMRC staff confirmed that assertion to be true.
ReplyDeleteThat's no joke.
If Fraud is worth 21BN a year and this new system saves even 40m a year what bloody use is it?
If HMRC staff see frauds occurring then they need to nip them in the bud, sharpish. If that means blowing the whistle then have the courage to do that. Keeping your heads down whilst waiting for your pensions is not 'public service'.
Read the original post. Even when a member of the public tells you what is going on it still gets ignored. It's the poor sap on the street that suffers for it.
HMRC shouldn't be trying to byump up the tax gap just to hire more staff.
In January 2007 my team identified and stopped some 250K in attempted frauds on tax credits. I put them forward for a recognition bonus which they all received. Senior Management actually asked us to put a training package together to teach other teams how to spot these frauds. The programme was stopped by Compliance who did not want our info being spread about as someone could pass it on the Criminal Fraternity. I dont work there any more so even if you think you know who I am I dont give a damn.
ReplyDeleteHMRC is an organisation in turmoil.
ReplyDeleteThose at the top are so out of touch with the reality at the workplace that they might as well be on a different planet.
The staff are so demotivated they are like zombies and are afraid to say anything.
IT is as unfit for purpose as the Department.
Pacesetter and Lean are followed with a blind evangelical zeal, straight over the precipice by a bunch of lemmings.
The long suffering "customers" continue to be abused by a "customer-centric experience" that is nothing short of a national disgrace.
And they are to hold a "shindig" for the top performers at "taxpayer" expense.
Is there something wrong here or am I missing the totally obvious?
HMRCISHITE!
:( :0 :)
@9 June 2011 23:50
ReplyDeleteWho do you suggest that an HMRC staffer whistleblow to?
The media can report it but it's obvious that the current and previous government don't care that HMRC is a mess and the only way the current crop would act is if they can see some multi billion pound PFI contract in it for one of their cronies in return for 'solving' the problem.
@10 June 2011 10:18
ReplyDeleteYou have a public forum here.
Report it here, email Ken or any other popular blogger. Don't be scared.
Sure the criminal fraternity may pick up on it. However once one fraudster knows about it, how long before others pick up on it anyway?
All your doing is cutting to the chase.
Heck even the main stream media may pick up on it. Once it's in the public domain (like this site). HMRC and Government will have to do something about it.
If you are scared of your IP being traced then use a mobile dongle thingy or use an internet cafe.
HMRC and the goddam puritans are always talking about people paying the right aamount of tax when it is due but this situation is much worse than that. If you can avoid it then bloddy well do so!
The Public Information Disclosure Act ( referred to mainly as the Whistle Blowers Act) is a very useful tool. Follow its guidelines on how to blow the whistle and you could be in line for £50K compo when your employer takes any kind of action against you as a result of you whistle blowing. Worked for me.
ReplyDelete10th June 13:10
ReplyDeleteAs you have obviously blown the whistle, would you care to expand on it for the benefit of quite a few who are tottering on the brink of doing so but still too scared to do so?
You might just be the catalyst.
@ 08:58
ReplyDeleteI have led many horses to water but none of them wanted to drink. I was left isolated by so called allies who chickened out at the last minute so if you think I am going to divulge my methods , think again.
If you are not happy with your situation change it. What is there to be scared of? If you follow the herd all you see is arses.
The information you need is in the public domain, follow the guidelines and you cannot go far wrong,
Alternatively if you want my advice and assistance my consultancy fees are £300 per hour.
One of the problem areas identifed by many here is the PCS.
ReplyDeleteIt is only concerned really with trying to keep people in work i.e. not made redundant.
It has forgotten its duty of care to members on a myriad of other issues and quite frankly without PCS support nobody is sticking their head above the parapet these days.
Its Solicitors are about as much use as the PCS when it comes to only backing dead certs.
There you have yet another part of the Criminal In-Justice system working parralel to those breaking the bloody rules.
HMIC wont go in there if they can avoid it and the IPCC is about as much good as a chocolate teapot.
Eventually something will break, maybe it ends up in an ECHR case or two or maybe pigs might fly.
WIKILEAKS!
ReplyDeleteI just love the assertions that HMRC officers do nothing so that they can keep themselves in a job.
ReplyDeleteI'm sorry but that is complete bullshit and shows you know nothing about the people in HMRC and care even less.....
The point about spotting fraud is even more out of whack...MTIC is a good case in point. Please please tell me how this fraud could have been anticipated by the great and the good, and while you're at it (and obviously such an expert) pleae let us poor simpletons know what the next great fraud will be......
Ever heard of opportunism?
ReplyDeleteWhen a system gifts an open chequebook to the criminal fraternity by dint of (EU) legislation and this is combined with an inability to handle the volume of repayment claims (credibility) and the use of "implants" and an intelligence system thats as good as money can buy (Organised Crime - see SOCA National Crime Threat/Assessment) plus the best of criminal minds (because only the noddy's get caught) then you don't need a degree in criminology or an ability to read the tea leaves to work out what would happen.
HMRC and its predecessors never learnt from their mistakes.
If you want to add into the melting pot poor management, crap investigation and mismanagemnt of "snouts", all of which have been documented.
Well that just leaves the next great fraud does it not?
Try having a dig into the Corporation Tax area...it may make SA and Benefits fraud look tame by comparison, but you have to look first.
Seek and ye shall find.
Tax does have to be taxing...
"people who's accounts had been hacked" Did you mean "people whose accounts had been hacked"?
ReplyDelete"I tried constantly to contact them at .70 pence per minute" Did you mean "I tried constantly to contact them at 70 pence per minute"? Maybe you should change your phone company.
" I contacted a corporation tax official" There is no job title "official" in HMRC
"The point about spotting fraud is even more out of whack...MTIC is a good case in point. Please please tell me how this fraud could have been anticipated by the great and the good"
ReplyDeleteAccountants were askng HMRC officers about MTIC as early as 2000. When asked whether the VAT was being paid by the supply chain HMRC would respond "That's none of your business. If you have a valid VAT invoice then pay your supplier. We'll worry about the VAT being paid to us."
Again an example of the public reporting issues to HMRC and HMRC not responding.
Agreed, there may be only so much that HMRC can do. One thing they really should not do is let it run, and then not even bother to go after the majority of the actual fraudsters. Underhandedly Shutting UK bank accounts and forcing all of the money offshore didn't really help either.
When legislation is enacted the first people that should take a look at new procedures before they come into play are security teams.
The biggest killer for HMRC and all boon to all fraudsters is standardised national substandard computer systems and rocedures, this cause exponential growth in fraud.
Have a look at the following links to see if you can make any recomendations to your superiors:
Get Agile anyone?
How many HMRC officers knew about this consultation or this one?
@15 June 2011 08:43
ReplyDeleteWhy don't you ask your MP about perhaps the 'intelligence' reporting as an arms-length body from the rest of HMRC?
It would suit the rest of us down to the ground as it would stop political interference as to how HMRC 'tax inspectors' or 'tax officials' or whatever the DM calls us nowadays do their job and stop the cost-cutting measures used as the 'quango' (or whatever you want to call it) would be set up solely to ensure the fraud they were reporting was being acted on - not stupid minimum 'base' investigation limits from risk profiles.
@15 June 2011 18:25
ReplyDeleteBe serious.
Ask an MP.
I've got more chance of convincing a tax collector that cheese is money.
Blow the whistles guys.
With respect to all you learned people, in relation to the original post supplied by myself. HMRC officials were not contactable during the original scam even by their senior staff in other departments, they were advised of the ongoing fraud in advance of paying out the monies to false accounts, yet still paid out.
ReplyDeleteGoverment officials, MP'S, were advised of the fraud whilst it was still on-going yet did nothing. This was not a high tech hack, this was a simple case of incompetance by HMRC and senior officials which was allowed to run to it's conclusion by the HMRC.
With the current economic climate and hard working tax payers being milked dry isn't it about time somebody was made to be accountable.
The statement "HMRC officials were unable to comment" is not acceptable, how many tens of thousands were paid out and where is the money?
We are not only bent over we are actualy taking it up to the hilt.