Out-Law News 1 min. read

Database cleaning destroyed one million tax records, says report


Housekeeping software installed by the Inland Revenue to delete old cases also deleted almost one million live tax records between 1997 and 2000, according to a report released last week by the Public Accounts Committee.

Advert: Free OUT-LAW breakfast seminars, UK-wide: Marketing and advertising on the web; and Ownership and sharing of customer dataThe report, which delivers a damning indictment on the UK’s tax credit system, also reveals that a problem with the National Insurance Recording System (NIRS 2) resulted in a backlog of tax cases.

Unfortunately, housekeeping software used by the Department to clean its PAYE database was programmed to delete cases over three years old from the Inland Revenue database – and this included quite a few backlogged cases.

The Inland Revenue discovered the problem in 2003 when, according to the report, it introduced a new information system. By that time, however, almost one million records had been incorrectly deleted, meaning that some 364,000 taxpayers will not receive repayments due to them (totalling £82 million), while an estimated 22,000 taxpayers will not pay the £6 million due by them.

The software had been in place for at least 10 years, and had been deleting live files since its installation, but not to such a massive extent.

The Inland Revenue is now part of HM Revenue & Customs (HMRC). According to it, until the NIRS 2 problem occurred, the Department had been processing 99% of cases within three years.

“We are talking here about your core data on taxpayers,” said Conservative MP and Committee Member Richard Bacon at a Committee hearing in January. “How could a programme have existed for such a long time that allowed that to happen?” he queried.

In response, David Varney, Executive Chairman of HMRC, explained:

“I think it existed because the connection was not made between the build-up of open cases and the length of time and this routine, so this routine was seen separately from the build-up of the open cases.”

According to the report, HMRC has now changed its systems, and stores data deleted from the database on a backup file, so it can access it if necessary.

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