TaxAdministrationRed faces at Revenue as accounts are qualified again

Red faces at Revenue as accounts are qualified again

HMRC may seek more information from taxpayers as it attempts to improve systems after third successive qualified audit

HM Revenue & Customs may ask individuals and their advisers for more
information about their affairs as it seeks to improve systems in the wake of
another qualified audit opinion.

The National Audit Office qualified the former Inland Revenue’s accounts for
a third successive year this week, saying the amount lost to fraud and error
through tax credits, 3.4% of the total, was ‘unacceptably high’.

Grant Thornton tax partner Mike Warburton said the verdict was ‘embarrassing.
If it happened to a public company there would be calls for the bosses to be
sacked.’

A Revenue spokesman said the department was looking to finesse its computer
systems to deal with separate PAYE problems. Ironing out the issue might require
the department to get more information from individuals and their advisers, he
said.

Due to individuals having multiple sources of income, internal audits have
concluded that around £575m may not have been identified or collected, and £295m
may have to be refunded.

A new PAYE code notification letter was to be produced to that end, the
spokesman said, alongside an improved P46. The problem only accounted for 0.35%
of PAYE receipts, he insisted.

The Revenue overpaid £2.2bn in tax credits in 2003/4, an increase from an
earlier estimate of £1.9bn.

David Varney, chairman of HM Revenue & Customs, which will report jointly
next year, said the problem was confined to issues around the government’s
flagship tax credit scheme.

He added: ‘Of course [the qualification] worries us. I would like to be out
of qualification. I take some pleasure from the fact that the rest of the £300bn
we collect [was not similarly qualified].’

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