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Audit office report highlights flaws in Customs fraud system

James Rogers
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.

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