A powerful committee of MPs has lambasted HM Revenue & Customs for its inability to create an affordable system with a single view on each taxpayer.
The Public Accounts Committee (PAC) also rebuked the department for signing a compensation agreement with supplier EDS, over the failed tax credits system, that guaranteed EDS future contracts.
HMRC forecast it would need to spend a quarter of a billion pounds on central system, if it were to provide a single view on each citizen's tax and benefits. The current systems are “old and not compatible with each other”, the report noted.
The lack of a single view of each taxpayer contributed to a raft of late payments and people becoming further in debt over tax, the PAC said in its ‘Management of tax debt’ report. Over £17 billion of tax is now owed to HMRC, and the number of tax debts are up 22 percent.
Edward Leigh, chairman of the PAC, said the linking of debts in one view was “crucial to effective debt management”. HMRC needs to start a “staged programme” to create such a system, he said.
The committee also heavily criticised HMRC for its handling of a dispute with EDS over a failed tax credits system. Under the agreement, in which EDS was to pay HMRC £71 million, the supplier was guaranteed future work.