Public accounts committee says flawed implementation of NPS systems led to an estimated �3bn in income tax overpayments being taken from workers' pay packets
The botched implementation of tax-calculating computer systems at Revenue & Customs has been savagely criticised by a powerful committee of MPs after it led to an estimated �3bn in income tax overpayments being taken from workers' pay packets.
"The flawed implementation of the NPS [National insurance and PAYE Services system] in 2009-10 has resulted in lasting and costly losses to Revenue & Customs and caused unacceptable un\certainty and inconvenience to the taxpayer," the public accounts committee concluded in a report published today.
Before the implementation of NPS, workers' tax information was spread across 12 separate databases which did not talk to one another.
Software problems had delayed processing of 2008-9 pay-as-you-earn tax returns by about a year and the system has continued to generate incorrect tax codes into 2010-11. There remains a backlog of 18m cases, stretching back two years or more, affecting 15m taxpayers. Estimated underpayments and overpayments total �1.4bn and �3bn respectively.
MPs accused Revenue & Customs officials of failing to understand the time limitations on their tax collecting powers, leaving them unable to collect �650m in underpayments from 2006-7 and earlier.
The NPS software was installed by Aspire, a partnership led by Capgemini, while other IT services consultants to work on the project included Fujitsu and Accenture.
According to a previous report by taxpayer value watchdog, the National Audit Office, the original �2.3bn cost of the NPS project had risen to �8.5bn over 10 years. Appearing before the public accounts committee last autumn Dame Lesley Strathie was asked if that cost had again risen. "I'm sorry, I cannot answer that," she replied.
A separate finding in today's report from MPs concerns complex tax settlements Revenue & Customs reaches with multinational corporations. "The average taxpayer has a right to assurance that [Revenue officials] have done all they can to maximise returns to the exchequer when resolving disputes over large companies' tax liabilities. While we acknowledge the [Revenue's] legal duty to respect taxpayer confidentiality, we expect it to seriously consider the scope for greater transparency over its procedures for resolving such disputes."
Complex and private settlements such as one reached between the Revenue and Vodafone have been highlighted in recent months by grassroots protest groups such as UK Uncut, who believe large corporations are not contributing their fair share to the exchequer in order to reduce the public deficit.
Source: http://www.guardian.co.uk/politics/2011/feb/01/revenue-tax-nps-savaged-mps-pac-report
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