The Inland Revenue has been criticised by the Public Accounts Committee for failing to use computers to identify employers failing to pay PAYE and National Insurance contributions.
MPs said it was ‘disturbing’ a decision was taken not to extend a successful experimental database when a new employer-compliance computer system has been delayed until 2001, on which costs have increased by #5m.
The PAC’s report follows its grilling of Revenue chairman Nick Montagu last November.
The committee also said it was ‘surprised’ by the Revenue’s estimate for the additional yield from the new system compared with the experiment, and was ‘concerned at the potential loss of tax’.
It criticised disparities in the likelihood and size of penalties imposed by employer-compliance staff in different regions, with the East of England more than twice as likely to impose a penalty as Northern Ireland, and the South-West imposing penalties twice the size of those in Scotland.
Penalties were imposed in only 10% of reviews amounting to 15% of the maximum allowed. The PAC said their infrequent use and low value ‘may send out the wrong signals’.
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