Missing tax millions
Revenue blamed 'focus on self-assessment' for uncollected PAYE and NI payments. Jon Bunn reports.
Tax worth ‘hundreds of millions’ of pounds has been lost to the Exchequer after the Inland Revenue failed to install a new computer database costing just #20,000.
Nick Montagu, the Revenue’s chairman since July, was grilled by MPs over the missing money when he appeared before the public accounts committee last Wednesday.
Montagu, who blamed the focus on self-assessment for the problem, apologised and said that the Revenue had not been rigorous enough.
But he said the lost tax, consisting of PAYE and national insurance payments, would be collected at a later date.
Pilot databases installed at local employer compliance units that could identify companies at risk of defaulting with payments, saw increased yield of 139% and 50%.
The National Audit Office estimated that a nationwide network of databases would have generated ‘many millions’ of pounds in additional unpaid tax – a 1% yield increase would see an extra #2.5m pour into the Treasury’s coffers.
Montagu, who said that the exact cost of implementing the database or the savings could not be calculated, defended the error: ‘Our overwhelming priority was to get self-assessment and the systems that support it working.
To go ahead with local databases would have taken people off that task.’
Labour MP Phil Hope accused Montagu of an ‘appalling level of complacency.
You have left us guessing how much could have been reclaimed if the system was in place,’ he said.
The committee asked Montagu to work with the head of the NAO, Sir John Bourn, to calculate the possible savings and to report back.
