Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 40-59)

HM REVENUE AND CUSTOMS

23 OCTOBER 2006

  Q40  Greg Clark: May I ask you one last question about a different subject? It relates to the e-portal you introduced. Paragraph 2.35 of the Report says that the e-portal, "was introduced in 2002"—as we know. That paragraph goes on to talk about "subsequent guidance issued by the Office of the e-Envoy"—that is, subsequent to the e-portal going live. In fact, that guidance was issued in September 2002, only a month after the e-portal went live and when it was already version 3.

I have a copy of the e-Envoy's guidance from that time and it is absolutely clear that the guidance that came in September 2002 said, "central government departments and agencies must comply"—"must comply" is in bold, which is the emphasis in the guidance—"with this framework when installing and operating electronic business services". Yet, the report goes on to say, "the HMRC first became aware that attempted fraud through the e-portal was an emerging problem... at the end of 2004". It also says that the peak was November 2005 and that the e-portal was not closed until 2 December 2005. In other words, three years and three months since the e-Envoy's report said that you were under an obligation to comply with its guidance, you finally closed the portal. During three years and three months there was a positive obligation in bold in the e-Envoy's report, yet nothing was done. Who is responsible for that?

  Mr Gray: The Department is responsible for that. What we were seeking to do during that period, as I sought to say in my earlier answer to the Chairman, was to strike the appropriate balance between accessibility and the use of the e-portal for those who wished to use it, and ensure appropriate security.

  Q41  Greg Clark: What is the point in having an e-Envoy that gives unambiguous guidance that central Government Departments and agencies must comply with, if agencies decide themselves rather airily to strike a balance between convenience and those injunctions?

  Mr Gray: I understand what you are saying, Mr Clark. We reached that decision in December 2005 and we are now absolutely clear that we will not reintroduce the portal until we are satisfied it meets absolutely full and current security requirements.

  Q42  Mr Davidson: May I start by asking about the extent to which you share information on the income of individuals and families with other Departments? Do you have access, for example, to information supplied to sections of the Home Office?

  Mr Gray: We exchange information with other Departments where there is an appropriate gateway.

  Q43  Mr Davidson: Is there an appropriate gateway with the Immigration and Nationality Directorate?

  Mr Gray: Yes. There are certainly some gateways. I am afraid I do not have in my head precisely what the elements are that we can exchange.

  Q44  Mr Davidson: Okay. I have a case arising in my constituency concerning an overstayer seeking indefinite leave to remain on the basis of marriage. Obviously they want to declare that they have enough income to support themselves and the figure for income that they have produced in relation to that is vastly different from the figure they have declared for Tax Credits. Indeed, the figure declared to the Home Office could be up to £48,000 per year, whereas the 2005-06 Tax Credits award notice could show both husband and wife as having a nil income. Would that be picked up?

  Mr Gray: I am not sure whether there is an appropriate gateway for those two sources of information. I could certainly look at the details of that case, if you want to let me have them.

  Q45  Mr Davidson: I think that we would want not only that case reviewed, Chairman. Perhaps we could have a response that indicates whether there is a gateway, and, if there is not, what is being done to create one.[3]

Does the risk assessment process address any specific difficulties around migrant workers?

—  suspects that a person does not have leave to enter or remain in the UK, or work in the UK;

—  suspects that a person has undertaken employment in the UK in breach of restrictions or conditions imposed on them;

—  is determining whether an applicant for British Citizenship is of good character, or

—  is applying rules relating to maintenance and accommodation to an applicant for entry clearance (eg does a sponsor of someone applying to come to the UK have sufficient income to support the applicant).

Information may also be disclosed under Section 19 of the Anti Terrorism Crime and Security Act 2001 to the Home Office if the information would assist them in any criminal investigation or prosecution. There is also a gateway to allow information held for former HM Customs & Excise functions to be disclosed for the Home Office's immigration functions at Section 20 Immigration and Asylum Act 1999.

  Mr Gray: Yes, it does. I might ask Mr Hartlib to add to this answer. As part of our risk assessment processes, we have undertaken to look at some categories of migrant workers, in particular those employed by gangmasters. The results of that work so far suggest that there are no significant risk differences between migrant workers and others, but Mr Hartlib might want to add a bit on the detail of that work.

  Mr Hartlib: Yes, the same risk assessments that are applied to Tax Credit claimants generally apply to migrant workers. In addition, as Mr Gray said, we have recently been carrying out a project to look at specific risks, as we recognise that there is anecdotal evidence that migrant workers are a particularly risky community.

  Q46  Mr Davidson: Okay, can I clarify whether children who are the subject of Tax Credit claims are required to be in the United Kingdom?

  Mr Gray: It is a rather complicated position.

  Mr Davidson: A simple yes or no would be sufficient.

  Mr Gray: The answer is not a simple yes or no. In some cases, they are required to be present, but in other circumstances—if the main earner is working, has a right to work and is present in the UK—they are not required to be present.

  Q47  Mr Davidson: In circumstances where it is not necessary for the children to be in the UK, what steps are taken to verify that they actually exist?

  Mr Gray: The claim would go through all our normal risk assessment processes in relation to children. I do not know whether Mr Hartlib can add anything.

  Mr Hartlib: Nothing further at this stage.

  Mr Davidson: Can you repeat that?

  Mr Hartlib: I have nothing to add to what Mr Gray said.

  Mr Davidson: But he referred the matter to you.

  Mr Hartlib: He asked if I had anything further to add.

  Q48  Mr Davidson: I think that that is sufficiently clear.

  Do Tax Credit claims for children require the same level of proof as Child Benefit claims?

  Mr Gray: Yes, they do. Indeed, we operate data matching arrangements between the two benefits to seek to add to the verification that is part of the verification procedures that I referred to earlier.

  Q49  Mr Davidson: My understanding is slightly different. Perhaps that could be pursued subsequently.

Can I clarify what steps are taken to verify details of a claimant's income and circumstances in a previous period when they lived outside the UK? If Tax Credits are based on someone's previous income, what steps are taken in the case of migrant workers to ensure that the stated circumstances and income are correct?

  Mr Gray: We would operate the normal procedures for all claimants in relation to verification of income, and if the risk factors suggested a high-risk case into which we ought to look more deeply, we would make further inquiries. But we do not operate a distinct regime for migrant workers because nationality is not a primary consideration for us.

  Q50  Mr Davidson: I understand about nationality, but someone who has lived abroad and produced details of previous income and circumstances that cannot be verified would seem to be fairly high risk. I am disappointed that they are not checked.

  Mr Gray: Obviously, we face that risk factor in dealing with UK nationals who might previously have lived abroad.

  Q51  Mr Davidson: That is right, but I suspect that there are not quite as many of them as there are migrant workers who have come here recently.

  Mr Gray: I do not have the precise figures in my head for UK nationals, but it is worth saying that the number of claims that we have accepted for child Tax Credit from migrant workers, based on the Home Office data published last August, is about 14,000. That compares with more than 430,000 migrant workers who are registered under the workers registration scheme, so it is important to bear in mind the context.

  Mr Davidson: That is right.

  Mr Gray: A rather small proportion of the claims that we have accepted for Child Tax Credit are from migrant workers. Indeed, there are a number that we have not accepted.

  Q52  Mr Davidson: Can you clarify how many you have not accepted?

  Mr Gray: I think we have had claims for about 21,000, and 14,000 have been accepted.

  Q53  Mr Davidson: So a third of the claims made have been false?

  Mr Gray: No, a third have not been accepted. A number may still be being reviewed.

  Mr Davidson: Indeed, but 7,000 of 21,000 have not been accepted at the moment, although they might be in future. That seems to me to be a fairly high proportion.

  Mr Gray: It also indicates, in relation to your earlier questions, that we are going through fairly rigorous procedures in reviewing these applications when they come in.

  Mr Hartlib: Mr Davidson, I do not know whether it would help if I go back to the project that I mentioned. We thought that this was potentially a higher-risk area and we wanted to carry out research and investigation to find out whether that was the case. The project is not yet complete, but the emerging findings are that the risk associated with migrant workers is no different from and is at a level comparable to that for other Tax Credit claimants.

  Q54  Mr Davidson: I find that surprising, because it does not gel with the information that I have been given, but can we clarify what systems you have in place for circumstances in which someone is awarded Tax Credit, leaves the country and then comes back again? As I understand it, there is no mechanism that would automatically pick that up. The allegation that I have is that that has been quite widespread.

  Mr Gray: There is a general arrangement that people leaving the country, if that exceeds either eight or 12 weeks depending on the circumstances, are no longer entitled. We make it clear to people, whether they are migrant workers or UK nationals going abroad, that that is the position. We are obviously aware of press stories and other things that suggest there has been a problem of the sort that you are referring to, but the investigations that we have done—again, this relates to the work Mr Hartlib described—have not led us to conclude that there is a particular issue here.

  Mr Davidson: Okay.

  Mr Gray: But we obviously continue to be vigilant in this area and would take action if we thought there was an issue.

  Q55  Mr Davidson: Yes, how many penalties have you charged where people have left the UK and not told you?[4]

  Mr Gray: I am afraid I have not got that figure in my head. I can—

  Q56  Mr Davidson: Okay, perhaps we could have that. What action is taken if a member of the public or someone working for a personnel agency reports to you that a migrant worker is making a false claim?

  Mr Gray: If we got specific information of that sort, it would be passed to our compliance teams and, depending on the nature of the information we are given, we would consider it for investigation.

  Q57  Mr Davidson: Would it surprise you to be told that a member of staff in a personnel agency in my constituency reported on repeated occasions to the Revenue office in East Kilbride that false claims were being made and was told that that was not the responsibility of the people with whom she was dealing; their responsibility was to get the payments made, irrespective of whether the claims were false, because their targets were all about getting the payments out? Repeated complaints of that sort were made, to no avail.

  Mr Gray: I would be disappointed if that were the case and I would very much wish to know about those circumstances and look into them.

  Q58  Mr Davidson: I think that will undoubtedly happen. Can you clarify what training is provided to local staff who are administering Tax Credits in, say, East Kilbride about exactly who can and cannot claim Tax Credits? Do you believe that the training they are provided with is sufficient?

  Mr Gray: A general level of background training is provided. What is most relevant in that context is that all claims are subjected to risk assessment criteria; for the majority of staff who are dealing with claims, that will be after the point at which the risk assessment process has been undertaken.

  Q59  Mr Davidson: Would it surprise you to be told that the staff of the personnel agency with whom I have been dealing frequently have to draw the rules to the attention of the staff in East Kilbride? The staff of the personnel agency know more about the rules than the people who administer them.

  Mr Gray: Again, that would surprise and disappoint me, but if that is the position, Mr Davidson, I would very much encourage you to let me know personally, so that I can look into it.


3   Note by witness: There are two statutory gateways for HMRC to pass Tax Credits information to the Home Office. Section 130 Nationality, Immigration and Asylum Act 2002 provides lawful authority for information to be disclosed on Tax Credits and other former Inland Revenue functions when the Home Office: Back

4   Note by witness: We do not hold that information. Back


 
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