THE level of fraud and error in the tax credits system has risen to 8.6%, figures released by the Treasury showed today.

Despite HM Revenue and Customs being set a target to cut the rate to 5% by 2011, a survey of 4,100 cases found it went up last year from 7.8%.

In a statement, Treasury Financial Secretary Stephen Timms said HMRC was taking action to reduce fraud and error and “will use the analysis published today to refine its strategy further”.

Detailed figures released by HMRC showed the 8.6% figure, which covers the 2007/8 financial year, was the lowest estimate of a range which put the level at up to 10.6%.

That equates to between £1.75bn and £2.12bn, of which up to 50,000 cases of fraud accounted for between £100m and £200m.

Mr Timms said HMRC had introduced “additional checks and interventions tailored to help prevent error entering the system whilst ensuring those who abuse the system are caught”.

“HMRC has also been embedding this deeper understanding of customer behaviour into its entire compliance programme,” he told MPs in a written Commons statement.

Anti-fraud issues included tighter control on the issue of claim forms, fraud awareness training for staff and deploying compliance officers, he said.