A reorganisation of tax offices, intended to improve customer service, has led to some tax codes changing.

The new tax credit computer system has been unable to recognise these new codes, forcing Revenue staff to look at alternatives ways of paying the money due.

A spokesman for the Revenue confirmed the problem claims had to be processed by hand, although a fix had subsequently been identified.

Those claimants affected would either receive an emergency payment or one directly from the Revenue, he said.

So far only seven tax offices have undergone the reorganisation: Humber, Dorset, South Wiltshire, Somerset and Hereford. A further 26 tax offices will undergo changes by March 2005.

The tax credit system, run by EDS, has since been dogged by problems since its launch in April this year.

The computer system quickly became overwhelmed by demand. This led to over 220,000 claims not being processed nearly 10 months after they were submitted, and 400,000 payments being delayed.

The latest failure is not thought to affect more than a thousand people, said the Revenue spokesman.

'We are looking at ways to make sure payments are not delayed,' he said.