Letter from Mr David Laws MP to Mr Michael
Fallon, Chairman of the Treasury Sub-Committee
The Paymaster General, in her evidence to your
Committee this afternoon, said she was unaware of the problem
of organised fraud in the tax credit system until late in November
2005. This statement appears to contradict her answer to a Parliamentary
Question from me in which she admits that she had been updated
on the problem in June and had probably known about it for far
longer.
"Over the last 12 months HMRC has detected
an increase in the number of organised attacks on the tax credits
system, predominately via the internet. HMRC continued to monitor
the situation closely and updated me in June 2005. A decision
was taken to suspend the internet service from 2 December following
an assessment by HMRC that the nature of the threat had changed,
which in turn changed the balance of judgement between maintaining
the service for genuine customers and the need to protect revenues."
[PQ 35700—10 January 2006]
I believe the Paymaster General has therefore
misled Parliament and I would like to request that you investigate
exactly what the Paymaster General knew about the level of fraud
and when. I shall also be writing to the Chancellor of the Exchequer
about the Minister's answers.
1 February 2006
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