PW's lottery error threatens contract

Price Waterhouse faces the prospect of losing the contract to audit the National lottery following costly errors made in the first live draw on Camelot?s new ?TV Dreams? show.

Camelot has been landed with a bill in excess of #500,000, after the 28 March draw went ahead, even though only 20 balls instead of 30 had been put into the mac-hine. Rhiannon Hapgood, a PW auditor, approved and signed off the balls as acceptable before the draw.

When the mistake was discovered a second draw was completed off-screen, and Camelot promised to honour both sets of winning numbers. Sources close to Camelot said PW will be asked to foot part of the bill or lose its new contract to audit ?TV Dreams? and its three-year contract for the main lottery draw.

Steve Webb, the Camelot representative who acted as draw master on the show, said: ?We?re working on a full-scale internal investigation into what happened on 28 March, and it would be inappropriate to comment until then.?

Lottery regulator Oflot has also launched an investiga-tion into the mistake, but although PW could be reprimanded, the regulator does not have the power to force Camelot to change auditors. ?It is up to Camelot to decide if it wants PW to continue,? said a spokesman.

PW says it has not yet received any indication Camelot intends to take legal action, but the relationship with the lottery operator ?remains good?. By our parliamentary staff Increased tax avoidance has been partly blamed for a continuing reduction in VAT receipts from large traders.

The Public Accounts Committee report said it was ?worrying? that additional tax revenue of #333m discovered by Customs & Excise during large-trader audits in 1996/1997 remained below the 1992/1993 level of #350m at constant prices.

They were also concerned these companies contributed a declining proportion of total VAT each year, adding: ?We note that tax planning by large traders may have contributed to these effects.?

The committee said that in assessing evidence from Customs, ?we sometimes struggled to get a clear picture from the detailed explanations we received?, and called for straightforward performance measures and targets.

The report adds: ?In our view, clearer thinking is needed. It is worrying that the department seemed not to have a tight grip on the underlying reasons as to why receipts from large traders have fallen from 38.5% of net VAT collected in 1993/1994 to only 32% in 1996/1997.?

Customs was also criticised for being unsure about the role of tax avoidance and weaknesses in the planning, testing and recording of large trader audits.

MPs demanded progress towards better estimations of revenue flows to provide a basis for more meaningful monitoring and measurement of Customs? performance.

PAC chairman David Davis said: ?Large traders consti-tute only 0.1% of the trader population, but are responsible for 32% of net income, thus the Department must get the assessment of these traders right. We were not convinced that the current approach to targeting is sufficiently robust.?