Inland Revenue's board has agreed to fund 1,250 extra clerical staff to restore levels of efficiency that existed before serious problems hit the linking of two major government computer systems.
The board's decision to fund 750 extra staff for the current year and a further 500 people over the next three years - specifically to restore normality - has not been announced to Parliament although it may cost tens of millions of pounds.
The latest edition of Inland Revenue's staff newspaper ReveNews reported that the board has approved funding for the extra staff "specifically for open case clearance work".
Cases remain open when the Revenue cannot resolve difficulties, such as uncertainty over tax paid, before the end of its financial year. Some queries on tax records have accumulated after problems arose from linking a 15-year-old computerisation of PAYE (Cop) system to the National Insurance Recording System (Nirs2) built in the mid-1990s.
The Revenue would normally have expected about 2.5 million taxpayer records to remain open at the end of the financial year.
But following the advent of Nirs2 and its links to Cop, the number of open cases doubled from 2.4 million in June 1998 to 4.8 million in June 1999. By June this year, the number had nearly doubled again to 8.54 million, although the number had been cut to 7.8 million three weeks ago.
ReveNews also reports that the Revenue has been unable to meet its open case clearance targets.
Last year a memo to the Commons Public Accounts Committee from the Inland Revenue said there had been "difficulties for both years (1997-98 and 1998-99) in reconciling pay and tax details on Cop with the information sent from Nirs2".
A Revenue spokesman declined to discuss why new staff had to be hired. He said, "Nirs2 problems during 1998-99 meant that clerical work on open cases could not be carried out for about 12 to 18 months. The cumulative effect of the Cop/PAYE system means that the knock-on effects of this are still being felt. We have plans to bring end-of-year processing and open case clearance down towards the pre-1998-99 levels."
Clerical staff can clear open cases by going back to source P14 data from employers to see how much an employee has paid in tax and National Insurance. This can then be used to reconcile information on Nirs2 with that on Cop.
Revenue staff are concerned that without a massive extra clerical effort, the department could be faced with automatically closing millions of taxpayer records without knowing for sure whether individuals have under- or over-paid tax. This could leave the integrity of the Revenue's data on taxpayers in doubt.
The Cop system is run by Texas-based services company EDS under a £2.4bn outsourcing contract with the Revenue. Nirs2 is run by Accenture, formerly Andersen Consulting, under a separate outsourcing deal.
The introduction of the full Nirs2 system was delayed by nearly 18 months and there were problems in linking its Unix client-server design to Cop's ICL mainframe-based architecture. In June last year, an internal Revenue briefing paper said five million tax records were "missing" partly because of these problems.
EDS has confirmed that it was unable to test the interface between Cop and Nirs2 fully before it went live.
The extra expense of hiring 1,250 staff could be seen as working against one of the main aims of computerisation at the Revenue: to cut costs.