Revenue IT still has a hill to climb

HM Revenue and Customs was coy late last year about listing its IT-related achievements. Aware that its chairman David Varney and chief information officer Steve Lamey had enjoyed some success with IT-enabled reforms, we had asked its officials for a summary of positive developments over the past few months. They declined.

HM Revenue and Customs was coy late last year about listing its IT-related achievements. Aware that its chairman David Varney and chief information officer Steve Lamey had enjoyed some success with IT-enabled reforms, we had asked its officials for a summary of positive developments over the past few months. They declined.

We can now understand the department's sensitivity towards positive news stories. Some of the Revenue's latest internal memos reinforce concerns about whether, despite some successful reforms, it is coping fully with the business of collecting the right amounts of tax and paying out the right amounts of tax credits. 

Last year we reported that the Revenue's systems and processes were struggling with tax returns filed via the internet by employers. The department did not know whether millions of employees had paid too much or too little. It also issued incorrect penalty notices to thousands of companies and had to relax parts of its enforcement regime because of a lack of information about who owed what.

Now we have learned that the Revenue has again issued incorrect penalty notices. This time its Electronic Compliance System has issued unjustified fines to 10,000 employers, claiming at least £400 per company. Revenue workers have been asked to investigate each case and issue apologies.

"We apologise for the inconvenience and the additional work this will cause," says an internal memo to staff.

Another memo reveals that mistakes are recurring when it comes to dealing with the annual returns of contractors. Revenue staff are being instructed not to process some returns while problems with duplicated fines are investigated.

"We are urgently investigating this problem," says the memo.

All of this extra work comes on top of the need for staff to tackle a backlog of work after overpaying £2bn in tax credits. In addition, the organisation is trying to merge two huge departments - while encouraging more taxpayers to file their returns online.

HM Revenue and Customs is also required to make 12,500 staff cuts and £507m of efficiency savings by 2008 in line with the Gershon review - at the same time as it is designing and implementing radical IT-enabled reforms. 

No wonder the department's press officials were somewhat reluctant to say when they would be able to give us the good news.

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