The
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.
