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Tax staff have no choice but to probe 13 million computerised tax records - all of which contain discrepancies and therefore must be examined manually. In its 2006/07 business plan, HM Revenue & Customs said that there would be six million cases, but it revised the estimate to 10.6m for a variety of reasons, such as system delays. Despite the hike, there are now 13 million ‘open cases’, representing a rise of over six million from five years ago, when over 1,000 extra officials were deployed to fix the problem. ‘Open cases’ arise when the tax an employee should have paid for the year is not consistent with year-end pay and tax data received by employers, which is subsequently sent to HMRC. The department’s computer confirms an ‘open case’ when it identifies discrepancies or fails to match information to a taxpayer’s records, meaning staff must examine each case manually. The revelation that 13 million cases, as of March, must be individually assessed by tax staff was uncovered by the National Audit Office, which published fuller findings last week. In its report, the NAO said: “The Department’s PAYE computer systems are not well suited to the efficient administration of income tax where people have more than one job or change jobs on a regular basis. “This is because the systems structure tax records around jobs rather than individual taxpayers. As a result, the Department can have difficulty identifying all relevant sources of income when calculating tax that should be paid. “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, for example when adjusting tax codes for Benefits in Kind.” Based on its most recent estimates, each year HMRC may not be pursuing some £880m of tax due, and taxpayers are likely to have overpaid around £340m, resulting in potentially five million taxpayers not paying the right amount of tax. The NAO added that the number of open cases has risen, in part, as a result of HMRC holding incorrect data on employees. Either this was because employers provided inaccurate details, or because both parties failed to notify the tax authority in good time of changes in employment. Jul 17, 2007 Email this article Printer friendly page Previous Page
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