HMRC to reveal impact of Concentrix contract collapse on tackling fraud and error

Government accepts request by MPs as part of a number of recommendations to improve customer service

Photo: Crown copyright

By Richard Johnstone

29 Jan 2019

HM Revenue and Customs has agreed to set out details of how the collapse of the its contract with US outsourcing firm Concentrix to tackle tax credit fraud and error has affected performance following a recommendation by MPs.

In its official response to a Public Accounts Committee report examining HMRC’s performance in 2017-18, the government said that the tax and benefits department would include an explanation of the impacts of terminating the Concentrix contract and in its next annual tax credit fraud and error statistics.

Concentrix was hired by HMRC in 2014 to conduct checks aimed at saving around £1bn by reducing fraud and error in a payment-by-results contract. However, the firm was unable to cope with the volume of calls from tens of thousands of benefit recipients whose payments had been stopped as a result of these reviews, and HMRC brought fraud and error-checking service back in-house in 2017.


Following the failure of Concentrix contract, MPs highlighted that its termination had led to a reduction in the resources for tackling fraud and error. This means HMRC expects that fraud and error to lead to overpayments equivalent to 5.5% in 2017-18, and to 6% in 2018-19, up from 4.9% in 2016-17. In addition, HMRC told the committee that tackling fraud and error in tax credits had been deprioritised, as their replacement by Universal Credit means they “are not a permanent feature of the landscape”.

HMRC had previously said it cost them £38m in reviewing cases following the end of the Concentrix deal, but the PAC report, originally published last October, recommended that HMRC “include an explanation of the impacts of terminating the Concentrix contract and de-prioritising improvements to the tax credits system” in its next annual error and fraud statistics. In its formal reply through a Treasury minute, the government confirmed it would do this as part of its 2017-18 tax credits error and fraud statistics for 2017-18, to be published in June.

“In the report accompanying those statistics the department will include analysis explaining the estimated impact of terminating the Concentrix contract,” the Treasury minute responding to the report confirmed yesterday.

“The government and the department continue to devote significant resources to tax credits error and fraud. Helping claimants avoid errors is integral to HMRC’s error and fraud strategy and the department will report back on what impact it expects its actions to have by April 2019, including where it has devoted differing levels of resource to the development of its IT systems.”

The government also accepted a recommendation that HMRC should develop a scorecard of performance measures in order to provide a broader overview of the customer experience of both businesses and individuals.

This will now be developed for implementation from July.

However, it rejected a call for a full review of call waiting time for customer enquiries.

Although HMRC “will look to provide the committee with further data on call waiting times, including time that customers spend navigating the department’s automated telephony system”, they said it is “not currently intending to make any changes to the call waiting time measure and it will continue to be reported in its current form during 2019-20”.

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