Routine computer housekeeping software has been blamed for wrongly deleting
nearly a million taxpayer records between 1997 and 2000, a Public Accounts
Committee report has revealed.
As a result, some 364,000 people have been underpaid a total of £82m, an
average of £226 each, and 22,000 people have been overpaid by about £6m, an
average of £259.
The report, released last week, said the Inland Revenue became aware of the
problem in 2003 when it introduced a new IT system and has been backing up files
due for deletion since then.
The PAC said deletions occurred in earlier years, but the numbers involved
were ‘much smaller’.
The blunder was revealed in a report largely devoted to problems with the tax
credit system whose introduction was described by committee chairman Edward
Leigh as ‘a nightmare’.
Leigh complained that there is still no reliable evidence from the Revenue
‘that the flood of public money being wasted under the previous tax credits
scheme through fraud and error has been stemmed to any degree’.
He added: ‘Hundreds of thousands of genuine claimants, many of them
vulnerable people in very difficult circumstances, have been seriously
He said the ‘frustratingly arcane’ system being used, routinely overpays
large numbers of claimants who subsequently have to cope with repayment demands
from the IR. He said it was an ambitious scheme that was fatally flawed by its
Leigh said Revenue chiefs should have warned ministers of the risks before
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