Page last updated at 00:12 GMT, Thursday, 10 December 2009

Old computers 'hindering' tax recovery

HMRC website
MPs say HMRC has been hampered by delays in introducing new systems

The taxman's ability to collect debts is being undermined by outdated computer systems, according to a committee of MPs.

Systems at HM Revenue & Customs "do not provide essential information", the Public Accounts Committee said.

Latest estimates suggest that £11.2bn of the £27.7bn owed in March this year is unlikely to be collected.

The committee says investing in new systems at HMRC would reduce the amount of tax that is owed but never paid.

Tax collection being constrained by a lack of funding goes to the heart of the government's financial dilemma, says BBC business correspondent Nils Blythe.

The government needs to increase tax receipts and cut Whitehall spending.

Backlog

The amount of tax collected has dropped steeply in the recession.

The UK's total tax take fell by £22bn to £436bn in the fiscal year 2008-09.

"HMRC's efforts to recover debt are being hampered by its systems, which do not provide essential information such as a profile of debt across taxes," said chairman of the committee Edward Leigh.

"The money needed to upgrade systems would be well spent if it were outweighed by the amount of additional tax recovered.

"Delays in introducing new systems have contributed towards backlogs in processing tax cases and have led to staff resources being diverted at critical times."

There is a backlog of 17 million PAYE cases awaiting processing that will not be cleared until new systems are fully operational in April next year, he added.

The HMRC said it had modernised its collection systems radically.

"By the end of November HMRC had collected almost £6bn more debt than in the same period in 2008," a spokesman said.

"We also saw a reduced level of tax credit overpayments during 2007-08 due to improvements introduced in 2005.

"The government will consider the committee's conclusions and recommendations in detail and respond formally to the committee in due course," he added.



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