A report from the National Audit Office has once again highlighted
weaknesses in an IT system used by Customs & Excise to fight
fraud.
Customs & Excise officials estimate that VAT fraud costs the
department up to £10.2bn a year.
Earlier this year the National Audit Office identified shortcomings
in the 10-year-old Local Office Registration and Deregistration
System (Lords), which is used by Customs officials to record and
track applications from traders registering for VAT.
Auditors highlighted poor control over the data input to Lords as
well as the system's "poor logical security".
In last week's report on Customs & Excise systems and accounts,
head of the National Audit Office John Bourn expressed concern that
these issues had not been resolved. Despite the department's plans
to improve Lords, Bourn said, "The concerns that I had last year on
this system still remain."
The National Audit Office also reported that, overall, Customs' VAT
IT systems are large, old and complex, and depend upon significant
resources for support.
Edward Leigh, chairman of financial watchdog the Commons Public
Accounts Committee, also backed calls for Customs & Excise to
improve its anti-fraud measures. He said, "While it would be
unrealistic to expect fraud and evasion to be eliminated, Customs
must redouble its efforts to combat it."
Earlier this year Leigh urged the department to make its management
information more reliable, saying that it should "get a better grip
in key areas".
In Customs & Excise's annual report, which was published last
week, department chairman Richard Broadbent said a balance needed
to be struck between investing to maintain older IT systems
supporting VAT and devoting resources to longer-term strategic
renewal.