HMRC ‘programming error’ leaves child trust funds awaiting payment

In HM Revenue & Customs' latest IT woe, a computer programming error has left the child trust funds of at least 50,000 poor families awaiting payment.

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In HM Revenue & Customs' latest IT woe, a computer programming error has left the child trust funds of at least 50,000 poor families awaiting payment.

The government has denied reports that claim families will lose out financially.

The problem concerns an additional payment of £250 into the accounts of poor families under the child trust fund scheme, but because of a software error the payments were not made to a number of accounts. The Treasury said it had identified at least 50,000 accounts that had been affected so far after the error by contractor Capgemini, though reports have said up to 100,000 may have been affected.

Kitty Ussher, economic secretary to the treasury, told a Treasury select committee that a “programming error” had delayed the payments, according to the Financial Times.

“It is a technical thing due to the way the various computers at HMRC ... talk to each other around people who are eligible for benefit payments,” she is quoted as saying. She added that there was another problem, which "we have not quite got to the bottom of", that also affected payments the FT reported.

But a spokesperson at HMRC told Computerworld UK that families would not be affected, because the payments go into funds that cannot be accessed until their child reaches 18 years of age. The spokesperson denied that the funds were related to child benefit schemes, which families access immediately.

“The payments were to the child trust fund, which is a long term investment vehicle. It builds up over 18 years.”

The government will reimburse affected families by applying an eight percent interest rate to the affected payments, the Treasury has confirmed.

A Treasury spokesperson added: "As the economic secretary told parliament last week no child or child trust fund account will lose out because of delayed payment."

"While we are taking this matter very seriously none of these accounts will be accessed for over a decade and the government will make sure that no child misses out on their additional payment."

A source at the Treasury said the where the IT contractor was at fault, it would "pay recompense".

HMRC's computer systems are run by Capgemini under the £8.5bn Aspire contract, in which HMRC is overhauling IT and attempting to reduce running costs by 10 percent by 2010-11.

Speaking on the latest problems, Capgemini said it "acknowledged that it was our error which caused this problem and apologised to HMRC", and it also apologised to the families involved. It added: "We are working with HMRC to ensure that the payments due are made as quickly as possible. We have agreed to fully compensate HMRC for the error.”

HMRC has experienced a number of severe IT problems in recent months. In March, a report by the National Audit Office said up to five million British citizens had been incorrectly taxed by the IT system.

In January, the self assessment website went offline on deadline day. HMRC has still not explained the reasons for the incident.

In November, HMRC infamously lost 25 million child benefit records and a CD containing 15,000 names, national insurance numbers and dates of birth of thousands of holders of Standard Life pensions.

And earlier this month, the Committee of Public Accounts said that as a result of complicated tax forms and a website "maze", taxpayers underpaid by £330 million each year.

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