Thousands lose tax credits after ‘unacceptable’ failings by firm

Thousands of vulnerable families are having their tax credits wrongly cut by a US outsourcing company that has breached its contract with the government more than 100 times in a year.

Ministers have admitted that the performance of Concentrix, which gets paid for every incorrect or fraudulent tax credit claim that it stops, has become “completely unacceptable”.

Figures released by HMRC yesterday show that in the past six months, up to 6,000 people had their tax credits wrongly stopped by Concentrix, and 64 per cent of all claims made against it were successful.

Last night HMRC told  that as a result of the failings uncovered, Concentrix would not have its contract renewed when it expires next year.

“We want to reassure customers who have had their tax credits stopped that we will prioritise their cases,” Jon Thompson, HMRC’s chief executive, said. “While it’s right that we ensure that tax credits customers only receive the money to which they’re entitled, it is vital that those customers have a high level of service. That’s why we decided not to extend our contract with Concentrix and HMRC is redeploying 150 staff so that customers can get through to advisers and resolve any issues.”

In a robust statement Concentrix blamed HMRC for failings in the contract.

MPs have been inundated with complaints from constituents whose benefits have been wrongly stopped — sometimes without notice.

Citizens Advice said that the number of people coming to them with tax credit issues has increased sevenfold in a year and warned that people were getting into debt through no fault of their own. In one case a woman’s benefits were cancelled because she was told that she was in a relationship with a man at her address who she had never met and who she subsequently discovered was dead. Another mother had her tax credits cut by £100 a week despite sending three letters to the company with the documentation it required.

At the same time checks by HMRC revealed that Concentrix was routinely breaching the most basic performance standards set out in its contract — up to 120 times in the past year. These included answering less than 50 per cent of calls within five minutes at times, with some claimants waiting up to an hour on the phone to speak to an adviser.

The company had also taken up to two months to open and deal with some letters sent by people who were about to have their tax credits cut. Under the rules claimants can have their benefits cut within a month if they do not provide evidence that their claim is valid.

Concentrix is operating with callous indifference to the thousands of people it is plunging into hardship

Frank Field, chairman of the work and pensions select committee, described the contract as a nightmare for those affected. He said that he had raised his concerns with Downing Street. Louise Haigh, the shadow cabinet office spokesman, said she had been contracted by 540 people after putting out an appeal on Facebook. “Concentrix is operating with callous indifference to the thousands of people it is plunging into hardship,” she said.

Speaking in parliament, David Lidington, the leader of the Commons, said that the “state of affairs and the number of contract breaches” by Concentrix were completely unacceptable.

Concentrix insisted it had acted professionally at all times and within HMRC guidelines, adding: “The HMRC statement not to renew the contract attacks our professional credibility . . . To be clear, we have answered significantly more calls than planned with HMRC. Throughout the contract we have not been incentivised to make wrong decisions for claimants and in fact would be penalised heavily for failure to adhere to HMRC policies and procedures.” It said it had saved the taxpayer nearly £300 million in tax fraud.