HM Revenue & Customs has announced that it's ended its tax credits fraud contract with the controversial Concentrix with immediate effect. It follows massive criticism of the contractor's performance and claims hundreds have had their tax credits wrongly stopped.

HMRC had previously said the contract would not be extended beyond May 2017 after it emerged thousands of people had had their tax credit payments stopped in error – many single mothers said they'd been left in dire financial straits as a result.

That decision had been prompted by investigations by MoneySavingExpert.com and others, including MPs, into the firm (see our full story here).

Following the issues HMRC took on over 181,000 cases from Concentrix, which have now been finalised, and about 250 Concentrix staff have also transferred to HMRC.

Tax credits are payouts made regularly by the state into bank accounts to support those with children or in work but with low income. See our Tax Credits guide for more info.

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What was Concentrix hired to do?

The firm had been tasked to look into 5.5 million tax credit awards and of these had "to identify in the region of two million cases... forecast to contain tax credit fraud or error", according to the now-ceased contract with HMRC.

The three-year contract, which started in May 2014, was worth between £55m and £75m and worked on a 'payment by results' basis. The contract was up for renewal in May 2017 – now we know it has ended.

HMRC says the amount it paid to Concentrix over the life of the contract was around £32.5m.

What can I do if I was affected by the Concentrix debacle?

For next steps and a full explainer, see our guide to the Concentrix tax credits shambles.

'This is the right outcome for customers and for the taxpayer'

Jon Thompson, HMRC chief executive, says: "We have reached agreement with Concentrix to exit this contract early.

"HMRC's dedicated staff have cleared all of the cases transferred from Concentrix while striking the right balance in both providing the standards of service that customers rightly expect and bearing down on error and fraud in the tax credits system.

"This is the right outcome for customers and for the taxpayer. I'm also pleased to receive 250 Concentrix staff, who will help us to deliver our priorities, offering job security to them well beyond the scheduled expiry of the contract in May 2017."

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