Recommendation 9

We have regularly reported on HMRC’s and DWP’s efforts to tackle fraud and error in the tax and benefit systems. DWP’s accounts have been qualified every year since 1988–89 due to material levels of overpayments and underpayments in benefits expenditure.24 In our report on their 2019–20 accounts we concluded that while DWP is good at understanding the types of fraud and error in the benefits system it is unable to demonstrate the cost- effectiveness of its counter fraud and error controls. We also reiterated our intention to hold DWP to account for improving its performance, aided by the fraud and error targets it has agreed to set.25 We have previously criticised HMRC for basic errors in financial forecasting including its uncertainty around what its estimate of fraud and error from tax credits should be and delays in producing a more rigorous estimate of the level of fraud and error associated with the Research & Development relief.26 We have previously concluded HMRC’s COVID-19 support schemes have led to a major reprioritisation of its resources and it has needed to reduce compliance activity while under lockdown. This has adversely affected HMRC’s core compliance activities and led to a backlog of investigations.27 19 Committee of Public Accounts, Covid 19: Local government finance, Fourth Report of 2021-22, HC 239, 4 June