Compensation payments of £35m because of delays in implementing the computer system helped force qualification of the National Insurance Fund accounts for the 13th year running.
Delays in implementing the National Insurance Recording System has lead to massive compensation pay outs to pension providers and a further £2m in compensation had to be paid to benefit claimants.
Andersen Consulting has already paid £3.9m in compensation for delays in 1997 and 1998 and could face further penalties.
Qualification of the 1998/99 accounts was primarily driven by the level of benefit fraud – estimated at £103m including £46.9m from the jobseekers allowance.
NAO chief Sir John Bourn said: ‘The Inland Revenue has made substantial progress, working with Andersen Consulting, in implementing the new National Insurance Recording System which underpins the National Insurance Fund.
‘However, there is still much to be done and I am concerned that the system may not be fully operational before March 2000 or, in the worst case, until June 2001.’
He said the problems would continue to have an effect on the Inland Revenue’s ability to combat National Insurance contribution debt ‘and the taxpayer is continuing to bear compensation costs for payments to those individuals who have suffered delays.’
The Inland Revenue took over responsibility for the National Insurance Fund on 1 April, 1999.
Accountants discover millions of pounds being paid to dead civil servants