HMRC upgrade delay leaves 16.2m 'open' tax cases

The government’ has 16.2 million tax cases open because the HMRC’s IT system are unable to cope and clerical intervention is required.

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The government’ has 16.2 million tax cases open because the HMRC’s IT system are unable to cope and clerical intervention is required.

The figure was revealed in a new report from the powerful House of Commons Treasury Select Committee, which noted that the number of “open” tax cases was “5.7 million in excess of the Department’s own target of 10.5 million by the end of 2007–08.”

However, the committee supported senior civil servants at HMRC who have delayed the introduction of a major new IT system that is aimed at reducing the number f open cases.

“We note that the introduction of HMRC’s new IT system has been delayed by a year. We accept that postponing the ‘go live’ date until testing is complete is prudent,” the MPs stated.

The MPs did call on HMRC to “publish the performance targets for the new system in terms of reduced open cases and other measures so that we may better monitor its effectiveness.”

The committee also went on to tell treasury officials that they should demand compensation from its IT suppliers over “serious errors” in tax systems.

The body, which looks at the performance of HM Treasury, HM Revenue & Customs and linked public bodies, highlighted two major failings - the non-payment to Child Trust Fund recipients; and the widespread systems crash of 31 January 2008

The MPs said, “We were disappointed to note the disclosure in the HMRC accounts that 50,000 children born in 2006–07, and eligible for the additional £250 Child Trust Fund payment, had not received these payments as at the end of 2008–09, an error which amounts to £12.5m unpaid endowments.

“In July 2008, then Economic Secretary to the Treasury, Kitty Ussher, told us that a further 80,000 children had not received payments due to them.”

David Hartnett, the top civil servant at the Treasury told the committee that the department had received some compensation from the supplier.

He also offered an explanation for the system crash on 31 January 2008 which hit those trying to meet the deadline for tax submissions for the 2006–07 tax year.

“The system had had its platform changed without really adequate examination of the risk of that. It will not surprise you that we have done some very vigorous discussions with our IT provider,” he told MPs during hearings last autumn.

The committee recommended that HMRC reviews the contracts with Capgemini, its IT provider "in the light of the very serious errors which have recently occurred and seeks financial compensation where appropriate.

“We regard it as wholly unsatisfactory that people entitled to Child Trust Fund payments should not have received them owing to the poor performance of an IT contractor. We seek assurances that the contracts drawn up with the PFI companies adequately allow for appropriate compensation to the taxpayer in the event of serious performance shortcomings.”

Treasury Select Committee: Administration and expenditure of the Chancellor's departments, 2007–08

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