By Nick Heath, 2 April 2008 16:14
NEWS
Her Majesty's Revenue & Customs has promised to fix its computer systems after it was found to have incorrectly taxed up to five million UK citizens.
The report by the National Audit Office (NAO) found that up to £880m in pay as you earn (Paye) taxes had not been collected each year, while other taxpayers had overpaid by up to £340m.
It said that Paye systems were not "well suited" to somebody having more than one job and that its shortcomings were compounded by inconsistent working practices within the department.
HMRC admitted its Paye systems had difficulty coping with people who had more than job and said it would move its processing from its 12 regional databases onto one single national database during 2008-09.
An HMRC spokesman said: "This will bring together separate employments into a single customer record to create a single view of employees' tax affairs.
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"Our staff will have access to all of an employee's pay, tax, national insurance and pension information which will be all in one place. This will make our Paye processing quicker and more accurate."
He pointed to the NAO's findings that the HMRC calculates the correct amount of tax in 95 per cent of income tax cases and has improved its processing of income tax returns.
The spokesman said the department was automating and tightening many of its processes and introducing checks on employee starter and leaver information.
The NAO said in its report that IT systems were "not well suited to the efficient administration of income tax where people have more than one job or change jobs on a regular basis".
It added: "These difficulties have been compounded by inconsistent working practices within the department as a consequence of staff not being aware of or failing to follow departmental procedures."
The NAO said problems stemmed from tax records being structured around jobs rather than around taxpayers.
Comments
There are 5 comments. Join the discussion
1. anonymous
It's a pity that HMRC haven't faced up to the real problem, wished on them by their political masters over the years, which is that the personal taxation system is now so complex that nobody really understands it, least of all the employees of HMRC.
A root and branch rethink of the overall tax (income Tax, national Insurance, etc) system would probably save millions in administration costs alone.
2. Chris Goodman
Whatever the proportion of "got it right", there is no reason why, based on the information given by employers and employees, that HMRC should not get it right 100%.
3. anonymous
H'm HMRC amalgamating their 12 regional DBs into 1 DB. Does this sound like part of Gormless Gordy's National DB, complete with planned for biometric details? Luckily, based on previous HMRC performance, they haven't a snowball's chance in **** of getting it completed.
4. Cassandra
If 5% of taxpayers = 5 million so does that mean there are 100 million tax payers in the UK does it?
I see HMRC excuse this works as long as you only have one job at a time and don't change it. Any effective system must interact with reality - the normal hire and fire, summer jobs, part-time and flexible working that does exists. What about a housing system working as long as you never move house, or become homeless or a sub-tenant?
5. anonymous
I have started receiving PAYE demands from HMC&E for a company I owned that ceased trading in December 2002 and that was closed in 2003. Doesn't exist anymore at Companies House either.
Even though I wrote to them in late 07 I have received further demands.
I have again gone permanent in Nov 07 and intend to close current ltd company as of Dec 07. So will probably get hassled by them again!