The Register reports that the government has admitted losing £2.7m to fraudulent claims through a hole in the tax credits system as details emerge of further employee identity theft.
Her Majesty's Revenue and Customs (HMRC) was forced to close down the tax credits website at the start of December last year, after a spate of fraudulent claims came to light which exploited the stolen identities of Department for Work and Pensions staff.
Paymaster general Dawn Primarolo has revealed more details of the fraud.
Primarolo said: "It is now established that some 8,800 staff identities may have been stolen in 2003-04 and that of these, 6,800 have been used in an attempt to defraud the tax credits system in Autumn 2005.
"Of the 6,800 fraudulent claims, around 4,100 were fully intercepted by HMRC before any payment, so that no payment was made.
"Of the remaining 2,700 claims where tax credit payments were made into multiple bank accounts using the stolen identities, payments were suspended immediately they were discovered, and all payments were suspended by 16 December 2005."
Primarolo divulged the information after it was also revealed that 4,000 Network Rail employees had their personal details stolen and bank accounts set up under false pretences.