Taxpayers held to ransom for Inland Revenue errors

Revenue discovers huge duplication in national insurance data and puts onus on individuals to sort it out.

Revenue discovers huge duplication in national insurance data and puts onus on individuals to sort it out.

Inland Revenue has warned hundreds of thousands of people that their pensions could be hit as they have been using the wrong national insurance numbers - but it has failed to reveal that the fault lies with duplicated and incorrect data held on its internal systems.

In a letter the Revenue tells people that if they fail either to use or inform their employer of the correct national insurance number it "may have difficulty crediting national insurance contributions to your account" which "may affect your entitlement to benefit and pension, or delay payment".

But the fault does not lie with taxpayers. Computer Weekly has learned that a massive internal data cleaning exercise, in advance of the introduction of new tax credits in April 2003, has led to the discovery of hundreds of thousands of discrepancies in national insurance numbers stored on the Revenue's Computerised Operation of PAYE (Cop) or National Insurance Recording systems.

Since claimants of the new tax credits will be identified by their national insurance numbers, the Revenue has been checking computer records - some dating back more than 20 years - to ensure that the data is flawless. It has discovered that in some cases the same national insurance number had been allocated to two or more people by mistake.

The original numbers dated back so far that they were unknown to later computer systems which allocated old numbers as if they were new. Others have been keyed incorrectly into the COP system. The database field which captures the national insurance number cannot automatically check whether a number is valid.

Now the Revenue has commissioned a new computer system, codenamed CR74, which aims to eliminate duplicated and incorrect data by identifying two, three or more national insurance numbers against a particular individual and suggesting the best one to be used in future.

On the basis of CR74's recommendations, the Revenue has sent out hundreds of thousands of letters advising people of the correct national insurance number to use in future. But the warning letters raise the question of whether the Revenue is seeking to avoid paying compensation for official errors.

The letters imply that the recipient, rather than the incorrect data held on internal systems, is to blame for duplicated and incorrect national insurance numbers that could lead to reduced pensions or benefits.

An executive working on Inland Revenue systems said, "The data cleansing exercise is an attempt by the Revenue to compensate for the Department of Social Security [now the Department for Work and Pensions] and the Revenue having over-relied on flawed sources of data."

A Revenue spokesman said, "The [national insurance] number can be incorrect for a number of reasons. We are not seeking to apportion blame but merely to provide our customers with the correct information. We are always looking at ways to improve our letters."

Inland Revenue's letter to taxpayers
A standard letter sent to an individual who had been using the same number all of her working life said, "We are writing to you because it would appear you have been using the wrong national insurance number." It went on to tell her she must "make sure that the right number is notified to each employer", adding that, "Failure to do so may mean we have difficulty in recording national insurance contributions to your account."

Read more on Data centre hardware