Revenue flouted warning over 'high risk' tax system

Tax credit shambles casts doubt over Inland Revenue's project planning.

Tax credit shambles casts doubt over Inland Revenue's project planning.

The Inland Revenue went live with a £150m system to pay new tax credits in April, despite warnings from ITauditors that there had been too little time for live testing and the project was high risk. The department now faces accusations that the system's introduction was a shambles.

Late last year, the Office of Government Commerce conducted a gateway review whereit said the project, the biggest ever undertaken by the department, was well run but high risk for a number of reasons. These included the limited time available for live testing and the problem of a large number of separate elements needing to come together in a short time for the payments system to go live by April.

Despite these warnings the department went ahead with television advertising and was committed to the April deadline for the system to go fully live.

Hundreds of thousands of claimants have not been paid on time, have not been paid at all or have received the wrong amount.

"Irrational exuberance" prevented adequate contingency measures being taken to cope with emergency payments in the event of the system failing, said those involved in the project.

The timetable for the system's introduction became so tight that a major software release to all tax offices was made only days before the payments system was due to go live.

The Inland Revenue asked claimants to submit their applications months before payments were due in an attempt to reduce risks, but the timetable was not mandatory and about one million claimants ignored it.

Since the introduction of the system, the Inland Revenue has received so many calls to its helplines that telecoms companies invoked "call-gapping", where callers hear only an engaged tone.

Staff also say that "green screens", where the system locks and needs rebooting with a delay of 15 minutes or more, are commonplace when officials try to cope with the backlog.

The system has been partly to blame for staff in seven tax offices walking out. The walk-outs came as staff dealing with claimants who had queued for hours were confronted with a computer failure. Meanwhile, the Inland Revenue denied there were any serious problems.

Extra staff have been brought in to cope with the high number of anomalies over claims, but this has only added to the volume of transactions and the pressure on the tax credits system.

Those involved in the project say that links between computer systems have not always proved sufficiently robust to handle the huge volume of transactions and have caused screens to lock.

The new tax credits system was built by EDS, the Inland Revenue's main IT supplier, as part of its £2.6bn, 10-year contract with the department, which expires next year.

The project is a flagship development in government for Mic-rosoft, which used its .net technology for online claims. Staff said the Microsoft elements of the project are not to blame for the problems.

A spokeswoman for the Inland Revenue was unable to comment on the IT problems and EDS also refused to comment.

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