HM Revenue and Customs (HMRC) has concluded discussions with Concentrix regarding the negotiated early exit of its contract to investigate fraud and error in the tax credits system.
As previously announced to the House, HMRC acted quickly to address the unacceptable level of customer service that tax credits claimants faced when contacting Concentrix and as a result, HMRC took back a significant number of cases. All 181,000 cases HMRC took back from Concentrix have been finalised. As of 13 November HMRC has completed around 28,500 of the approximately 32,500 requests for review of Concentrix decisions (known as mandatory reconsiderations) and will continue to handle any new cases as they arise.
On 14 September, the House was informed that HMRC would not be extending its contract with Concentrix beyond its scheduled expiry date in May 2017. On 26 October, the House was further updated that HMRC had entered into discussions with Concentrix on a negotiated early exit from the contract. Those discussions have now concluded and the chief executive and permanent secretary of HMRC has decided to bring the contract to an early close.
As a result of the contract ending, around 250 Concentrix staff have transferred to HMRC following completion of appropriate checks and HMRC has put in place a programme of induction and training. All these new staff are to receive formal training and support from team members, their managers and from subject experts. Managers will also receive bespoke management training to assist them in supporting teams.
The latest estimated saving to the Exchequer from reducing fraud and error as a result of this contract is £193 million. The amount paid to Concentrix over the life of the contract is approximately £32.5 million.
The £32.5 million overall cost of the contract includes the following:
HMRC has paid approximately £15.3 million in 2016-17 with respect to work completed or work in progress at the end of the contract.
As part of this, HMRC has applied the provisions of the contract that allow for reductions in payment when Concentrix has not achieved the required levels of performance against the indicators. For 2016-17, HMRC reduced payments to Concentrix by £1.9 million, and over the lifetime of the contract payments to Concentrix were reduced by a total of £3.5 million.
HMRC has paid approximately £500,000 towards some of Concentrix’s exit costs from its subcontracts.
Tackling error and fraud in the tax credits system remains a priority for the Government, and HMRC will continue to bear down on this. However HMRC recognises that the service provided to tax credit claimants deteriorated in recent months, which is why HMRC has negotiated an early exit from this contract. The National Audit Office has announced a wider examination of the contract, and HMRC will be working with them on their report.