Revenue security questioned

Leading tax experts have attacked the Inland Revenue for failing to provide an adequate explanation for serious breaches of client confidentiality through its electronic lodgement system.

The Revenue confirmed this week that 41 agents using ELS had received statements of account for taxpayers who were not their clients. One user of CSM’s Taxman program received a misdirected batch of around 70 statements, the Birmingham-based software house reported. Transaction Technology also reported ‘two or three’ incidents.

According to a Revenue spokeswoman, computer contractor EDS ‘was still looking at the problem, and had put some checks in place to ensure it did not happen again’. Given the importance of client confidentiality, the Revenue has written apologies to the people concerned, she added.

The Revenue’s explanation was not good enough for PricewaterhouseCoopers tax partner John Whiting. The firm had received a number of account statements erroneously. When Whiting contacted the Chartered Institute of Taxation, the institute indicated it had received a number of other complaints.

The Revenue’s customer relations department explained that the problem was a ‘one-off’ that had been resolved, said Whiting.

‘Our main concern is that it was a known problem. In the spirit of working together, we would have preferred to have been notified, rather than having a couple of agents bring it to our attention. Forty-one out of the 1,700 agents who registered for ELS is statistically significant.’

The CIoT and taxation software developers will raise the issue with Revenue and ELS representatives when they meet at their regular ‘business forum’ later this month.

‘It’s on my agenda to get to the bottom of what went wrong,’ said Whiting.

‘We want a real explanation. The important thing is not so much that an error has occurred, but that a certain amount of brushing under the carpet has occurred on the part of the Revenue.’

Blackstone Franks partner Robert Maas, who chairs the English ICA’s tax faculty, said the episode confirmed some of his concerns about the system’s reliability. ‘It sounds like an amazing breach of taxpayer confidentiality,’ he said.

Related reading