A controversial contractor hired by HM Revenue & Customs to cut tax credit fraud won't have its contract extended beyond May 2017 after massive criticism of its performance and claims hundreds have had their tax credits wrongly stopped.

HMRC has faced mounting pressure to review its contract with the US business services firm Concentrix over the past week, with MPs lambasting it for "callous indifference" and a concerted social media campaign backed by thousands highlighting concerns.

MoneySavingExpert.com had launched an investigation into the firm after being contacted by dozens who claimed they'd had tax credit payments stopped in error – many single mothers who said they'd been left in dire financial straits as a result. We were awaiting Concentrix's response to some of these claims when HMRC announced its contract would not be renewed.

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.

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 that are forecast to contain tax credit fraud or error", according to its contract with HMRC.

Its current three-year contract, which started in May 2014, is worth between £55m and £75m and works on a 'payment by results' basis. The contract was up for renewal in May 2017 – now we know it won't be extended.

What problems have been reported?

Concentrix has faced a catalogue of complaints over the way it's reviewed people's entitlement to tax credits, with claims that payments have been cancelled arbitrarily, letters have gone missing and tax credits have been withdrawn without the required 30 days' notice.

Louise Haigh, MP for Sheffield Heeley, is one of a number of MPs who've recently called on the Government to urgently review the Concentrix contract.

She says: "Concentrix are operating with callous indifference to the thousands of people they are plunging into hardship, including many here in Sheffield.

"This is a failing contract and a firm clearly not fit to conduct checks of this kind. And it is people trying to do their best – working hard, raising a family – who through no fault of their own are finding themselves at the sharp end of what appears to be a ruthless 'guilty until proven innocent' policy for the millions on tax credits who this firm is pursuing."

Last week, after a question from Haigh, the Treasury revealed that Concentrix had failed to meet the performance standards set out in its contract on 120 out of 1,625 instances.

HMRC to axe tax credit checking firm Concentrix
Concentrix has faced a catalogue of complaints over the way it's reviewed people's entitlement to tax credits

What's happening now?

HMRC says that it and Concentrix will now be focused on clearing outstanding cases, and it's reassigning staff to help ensure complaints can be dealt with.

HMRC chief executive Jon Thompson says: "We want to reassure customers who have had their tax credits stopped that we will prioritise their cases, and make sure that they are processed as quickly as possible.

"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 have 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 about their claim."

HMRC says its redeployed staff will be working on 'mandatory reconsideration' cases (this is when a previous decision by Concentrix has been challenged).

What can I do if I've had tax credits wrongly withdrawn?

HMRC says those who've had their tax credits stopped will have their cases prioritised and processed as quickly as possible. It says anyone who provides further info to show they're entitled to tax credits will have their money backdated for any period where payments were stopped.

Concentrix will now only be dealing with cases it's already started looking into. It won't be opening any new cases and HMRC will be dealing with any 'mandatory reconsideration' cases.

HMRC told MoneySavingExpert: "The 150 HMRC staff will be looking at cases where customers have asked for a decision to be reviewed (mandatory reconsiderations). They will also be advising on more complex cases and back office support work to enable Concentrix to focus on handling call demand."

If you want to appeal a decision you should:

  • First ask Concentrix to reconsider its decision. This is called a mandatory reconsideration. You usually have to request a mandatory reconsideration within a month of you being notified of changes – HMRC hasn't yet confirmed if this timescale will now be amended.
  • If you're still unhappy, appeal. You can go to the Social Security and Child Support Tribunal in England, Scotland or Wales or the Appeals Service Northern Ireland.
  • If you're hitting a brick wall, try speaking to your MP. Louise Haigh MP says if you can't get through to Concentrix and can't get a response from HMRC either, then "people should contact their local MP who can expedite the matter on their behalf". You can find out who your MP is and how to contact them via the WriteToThem website.

HMRC says it won't be setting up a separate helpline for anyone affected by a Concentrix decision – even though there have been reports of people having to call Concentrix up to 50 times to get through, with further waits of 50 minutes just to speak to an adviser.

How quickly should my case be dealt with?

We haven't yet been able to confirm precise timescales with Concentrix, but have seen reports that it's committed to a 15-day turnaround for all outstanding cases and 21 days for all mandatory consideration cases.

HMRC wouldn't say if these timeframes are part of its contract with Concentrix but says most cases should be dealt with more quickly than that.

Will I get backdated payments if I successfully appeal?

Yes – HMRC has confirmed you'll get back payments from when your entitlement was wrongly stopped – though you won't get any interest. Originally it also told us you'll get this payment as a lump sum.

But after a number of people contacted MSE founder Martin Lewis to complain they’re getting repayments of as little as £3/week on top of their reinstated tax credits, it's since clarified that while that's true if your credits were stopped, it's not the case if only part of your claim was removed.

What does Concentrix say?

A spokesperson for Concentrix says: "We have operated professionally at all times and within the guidance set by HMRC. The HMRC statement not to renew the contract attacks our professional credibility, and the commitment of our staff who have performed determinedly, despite the issues with HMRC policies and procedures.

"In addition, throughout the contract, Concentrix has employed good hard-working people within the UK, at Concentrix expense, in order to staff phone lines and handle customer calls which were agreed by HMRC and were based on HMRC assumptions.

"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.

"Through the term of the contract we are pleased to have saved the taxpayer nearly £300m in authentic confirmed tax fraud and error which otherwise would have cost the taxpayer money."

In response, Louise Haigh MP told MoneySavingExpert: "Concentrix failed to meet performance standards dozens of times in the past year alone and it has been particularly failing on telephony KPIs (key performance indicators), despite what it says in its statement.

"Given their abysmal performance, [the fact the contract is not being renewed] should come as no surprise and it should be applauded that no more vulnerable people will have to deal with Concentrix [from May 2017]."

"The Concentrix statement [following the HMRC statement that it would not be renewing the contract] was full of half-truths."

What action will be taken against Concentrix?

Speaking in Parliament today in response to a question of whether an inquiry into Concentrix would be started, Jane Ellison MP, financial secretary to the Treasury, said: "I don't think that there's any need to go into inquiries etc etc.

"We have a contract, it is monitored on a regular basis, it is not going to be renewed when it comes to an end in May next year."