By Andy McCue
Special to CNET News.com
December 5, 2005
The British government has come under fire after it emerged ministers
have known for months that criminals were using stolen identities to
make fraudulent online tax credit claims worth millions of pounds.
HM Revenue and Customs, the U.K.'s tax authority, was warned about the
flaw more than six months ago. However, it only closed the tax credit
Web portal down last week after it discovered criminals had used the
identities of 1,500 government employees at the Department of Work and
Pensions to make fraudulent claims.
The tax credit Web site handles around half-a-million transactions a
year. The fraudsters were able to change claim details and redirect
the money into their own bank accounts by getting hold of a genuine
claimant's name, date of birth and National Insurance number, which is
the U.K. version of a Social Security number.
The fraud involving innocent staff at the Department of Work and
Pensions only came to light during compliance checks by HM Revenue and
Customs. British lawmakers were told that the tax credit Web site has
been hit by more than 30 million pounds, or about $52 million, in
The police have now been called in, and a representative for the tax
agency declined to comment further while the criminal investigation is
going on. However, the representative said the tax credit Web site
will remain down until the review of its security is completed.
David Laws, the Work and Pensions secretary for the Liberal Democratic
party, slammed the Labour government and said ministers must make a
statement as to why they took so long to take action to stop the
fraud. "This complicated and chaotic system is wide open to fraud," he
said. "Ministers have known for some time that organized criminals
were using the Internet to defraud the system."
The debacle is yet another embarrassment for the U.K. government's
flagship tax credits program, which has suffered from problems since
it was launched in 2003. Much of that has been down to an IT system
described as a "nightmare" by British lawmakers. EDS was last month
forced to shell out 71 million pounds, or about $123.5 million, to HM
Revenue and Customs to settle a dispute over problems with the tax
credits IT system.
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