HMRC are still not achieving value for money from tax credits, having failed to effectively manage losses from fraud and error, according to a report from the National Audit Office (NAO).

The Revenue announced in 2009 its aim to tackle the issues so that they would account for just 5% of losses by 2010/11 – but the department missed the target by more than three percentage points worth around £850m.

A sustainable reduction has yet to be made, notes the new NAO document, although the taxman has made improvements to the approach for combating dishonesty and inaccuracy in the tax credits system.