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Network Rail employees' identities hijacked

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23rd Jan 2006
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By Nichola Ross Martin

Identity fraud continues to plague the Tax Credits systemafter it was revealed that identities of Network Rail employees have been used by fraudsters to open bank accounts and make false claims. The scale of the fraud is not clear, but may run into millions.

The fraud was discovered by HMRC, which notified Network Rail. The government hopes the discovery will dispel the view the Revenue is an easy target on the grounds that its checks were more effective than those carried out by the banks.

Identity fraud is yet another setback to the tax credit system. Critics have claimed that its design renders it open to fraud, as well as causing problems with overpayments to honest claimants.

As recent as two weeks ago, David Varney, chairman of HMRC, appeared in front of a House of Commons Public Accounts Committee and admitted that that criminals had defrauded the tax credit system to the tune of some £15 million by making false claims in the name of job centre workers.

And in December, the online tax credit application system was suspended after the emergence of large-scale fraud, which involved some 1,500 Department for Work and Pensions staff whose details were hijacked to make fraudulent tax credit claims.

Nevertheless, the Revenue insists that the latest incident does not highlight weaknesses in the tax credit. It told the FT system: "It is nonsense to say that the tax credit system was to blame in this case when it was HMRC which was first to identify the Network Rail fraud".

A Treasury sub-committee is continuing to examine the administration of the Tax Credits system, and is holding sessions with interested parties. Ministers have just heard evidence from the Citizens Advice Bureau, the Child Poverty Action Group and the One Parent Families group, all of whom agree that the basic idea behind tax credits is a good one and that the system does genuinely help those who need the credits most. In short they are keen to see it work properly.

Ms Kate Bell, policy and research officer, of One Parent Families may have identified one of the key problems with the Tax Credits System design, which revolved around its doomed IT architecture. According to uncorrected evidence published on the Treasury's website she said: "It seems that HMRC designed a system that would work for IT rather than that would work for claimants. The problems with any overpayments are very much an example of that."

It is clear that the design of the IT system is also making it easier for organised ID fraudsters to operate, and there are many more hurdles to overcome before the credits system works properly.

http://www.rossmartin.co.uk

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Replies (3)

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By Neville Ford
27th Jan 2006 12:50

Why do we have to claim anyway?
What baffles me is why anyone has to claim anyway. The Revenue know, or should know, what we all earn, either through the PAYE system or SA Returns, so they should just pay the tax credits automatically. If they need additional data, not collected through either of those systems, then the level of income should prompt an enquiry for that information to assess the exact level of credit due.

Of course I know really why we have to claim, because it was an ill-thought out, knee-jerk policy, with no thought given to implementation and how the data would be collected in an organisation that has disparate systems and an historically abismal record in IT projects. So some poor sod, probably working from scant guidance, had to make it up in double quick time to meet some political target.

But hey-ho, chaos is very good for employment, you need loads of people to manage chaos.

Rant over.

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By User deleted
26th Jan 2006 12:35

Ur-hum
"It is nonsense to say that the tax credit system was to blame in this case when it was HMRC which was first to identify the Network Rail fraud".

How does it get as far as fraud then and not attempted fraud?

Given how difficult it is for genuine claimants to now get their awards (for a new claim you can no longer claim online, no longer check if you're eligible online, and agents can only request one form at a time for one individual) how is this not in part the Revenue's fault?

All these cases are identifiable by their National Insurance references. This can then be checked to their income details via PAYE or self assessment records in the vast majority of cases before any award is actually paid out.

I think the truth is nearer to information not being shared within the Revenue under "Data Protection" claims (brought in due to problems with the honesty of a very small number of staff working there)and pure lack of determination by staff to take reposibility and get issues resolved properly (i.e. not file it in the bin). The information's there, it takes ages for the claims to be processed - why aren't these checks done properly?

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By kjevans
26th Jan 2006 13:53

Indentity theft made easier?
Identity theft may be getting easier because of attempts to check whether someone is allowed to work in this country. Many agencies and employers now request details, including NI details for prospective employees and even for non-employed sub-contractors. I bet many of the copies of these documents get recycled or filed in the bin.

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