IT systems overlook £900m VAT

The technology woes of Whitehall computer systems just never seem to end.
This time it’s the collectors of VAT in the firing lining from the Commons
public accounts committee, which has lashed the taxman’s systems for overlooking
£900m worth of VAT debts.

In a report the chief financial watchdog for the Commons said that debt
collection for the tax stood at £2.6bn – a 24% improvement on 2002’s figure of

The all-party group of MPs paid tribute to VAT collectors remarking that
officers at HM Revenue & Customs ‘believes that this increase is partly due
to their success in combating missing trader fraud’.

But the report then turned on those it had praised. ‘The department has
failed to resolve the significant difference between its VAT mainframe
accounting system and its trader register, which meant £900m of debt was not
reflected on the debt case management system and therefore not under active

VAT receipts top £125bn a year, with much of it being collected on time.
Large chunks of it however, fall into arrears. ‘In June 2003 we noted a rapid
rise in VAT debt levels and the need to reverse this trend. Since 2002, the
Department has re-engineered the structures, systems and training for VAT debt
management with the aim of promoting consistent, effective debt collection
practices,’ said the report.

But it added: ‘Reported debt, which includes recoverable debt and debt which
the department is unable to collect, continues to rise.’

Still some way to go then, for the HMRC and its IT systems.

Related reading

Life Belt with Computer Folders