Taxpayer computer records that contain discrepancies
have soared from 2.5 million to 20 million in just over a decade,
Computer Weekly has learned.
The record backlog of delays in clearing "open cases", as
computer records with anomalies are called, means millions of
taxpayers are not being notified promptly of extra tax payable or
refunds due.
The backlog leaves HM Revenue and Customs having to divert money
and people into resolving discrepancies in the records manually at
a time when HMRC's board is trying to cope with competing demands
of cutting costs while modernising its PAYE systems.
An open case means the taxpayer record has not been reviewed to
check the individual's details are correct and the right amount of
tax been paid. Each open case means potentially that a taxpayer has
paid the wrong amount of tax.
Accountants and payroll administrators say it is
unacceptable that HMRC has not reviewed the tax liability of
about half of the UK's employees. In 2007, there were about 27
million pay-as-you-earn [PAYE] taxpayers who contributed about
£125bn in tax.
Normally tax IT systems automatically close taxpayer records by
the end of the financial year, but not when there is data missing,
or there are discrepancies and queries, particularly over tax
codes.
Research by Computer Weekly has established that the number of
open cases which require clerical intervention has risen from 2.5
million in 1998 to 20 million in 2009.
The numbers started to rise steeply in the 1990s when Inland
Revenue brought in a new national insurance recording system NIRS2.
For years afterwards, Revenue staff had difficulties synchronising
taxpayer data on NIRS2 with COP, the mainframe-based
Computerisation of PAYE system.
The Revenue would normally have expected about 2.5 million
taxpayer records to remain open at the end of the financial year.
But after the go-live of NIRS2 and its links to COP, the number of
open cases doubled to 4.8 million in June 1999.
By June 2001, the number had nearly doubled again to 8.5
million. At that time HM Revenue and Customs hired an extra 1,250
clerical staff to clear the backlog of open cases.
Despite this the backlog has continued to rise. In 2007, it was
11.5 million. By 31 March 2008, there were 16 million open cases.
At the end of March 2009 the backlog stood at 20 million.
In 2007 when the number of open cases was 13 million, the then
head of the National Audit Office Sir John Bourn said: "HMRC's
computer systems are
no longer well-suited to the efficient administration of income
tax, especially where people have more than one job or change
jobs frequently."
Details of the latest figures were revealed in the 2008/9
accounts of HM Revenue and Customs published this week.
The National Audit Office estimates that six million of the open
cases are likely, when they are reviewed, to entail a tax refund or
extra tax payable. The Department should extend its use of data
matching to assist in clearing open cases, said the National Audit
Office.
Read more:
Backlog
of open cases at nearly 12 million>>
HMRC "loses" millions of electronic tax records
Inland Revenue loses millions of taxpayer's records
>>