TaxAdministrationRevenue under fire over IT problem

Revenue under fire over IT problem

The Inland Revenue has been critised for taking three years to fix a problem with its computer systems which caused it to overpay £82m of tax rebates.

Link: Known fault caused Revenue pensions woe

The problem with the Revenue’s computer system, identified in 1999, meant it was unable to recognise amended annual tax returns. But no fix was introduced until September this year.

‘We didn’t want to introduce a piecemeal solution. After a thorough investigation, we introduced a whole package of measures to address this,’ said a Revenue spokeswoman.

The system treated amendments made to 175,000 accounts as separate returns. This resulted in the Revenue paying out over £82m in extra rebates over a five-year period, which must now be reclaimed – £474 on average per account.

The shadow chief secretary to the Treasury, Howard Flight, said he will be questioning the government over its handling of the affair. It raised doubts whether the Treasury was sufficiently informed about the Revenue’s operations, he said.

‘The delay of three years is outrageous. It is irresponsible when talking about a problem that affected so many people,’ he told VNU News Net.

The Revenue said the original specifications for the National Insurance Recording System (Nirs2) had omitted any requirement for the system to recognise amended returns.

Because the value of many pension funds have fallen since the overpayment, pension providers have argued the Revenue should compensate them.

The Revenue has said it will compensate them for the shortfall because of “the unusual circumstances of this case”.

‘This is a significant move, which is to be welcomed,’ said a spokeswoman for the Association of British Insurers, ‘but the Revenue still has to answer the questions of how people seek redress.’

The Revenue has subsequently implemented a fix, and introduced additional clerical checks to ensure that there is no repetition of the mistake.

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