NAO concerned over HMRC’s real-time PAYE tracking systems

NAO concerned over HMRC's real-time PAYE tracking systems

Amyas Morse wants the taxman to better track the financial data associated with its real-time PAYE filing system

THE TAXMAN’s ACCOUNTS have been qualified by the government auditor over the level of error and fraud in the tax credits system. The 2011/12 tax credit figures show HMRC overpaid between £1.9bn and £2.3bn to claimants because of error and fraud, while up to £360m was underpaid.

Estimated error and fraud stands at 7.3%, the lowest since the tax credits scheme was introduced in 2003/04.

Despite the qualification, the report by National Audit Office comptroller and auditor general Amyas Morse was relatively benign.

The NAO found that HMRC had met its target to operate a normal PAYE service up to March 2013. It successfully cleared the remaining 6.7 million outstanding end-of-year reconciliations for 2008/09 and 2009/10. It also cleared historic open cases back to 2003/04, and reconciled the 2010/11 and 2011/12 tax years.

However, an estimated £953m of tax was foregone for the years between 2003/04 and 2009/10 to “keep workloads manageable”.

The real time PAYE (RTI) system, which is being rolled out to employers, does not contain a budgeted contingency for any significant extra development costs, the NAO noted.

It recommends that HMRC “urgently addresses” weaknesses around its ability to produce and report financial information on PAYE, following identification of the issues during the pilot scheme.

The taxman has yet to produce a “comprehensive plan” to deal with VAT losses incurred through online trading, but it had prevented £579m of erroneous and fraudulent VAT repayments in 2012/13.

“We have found good progress by HMRC in reducing costs and meeting its revenue targets. In respect of raising customer service levels to an acceptable standard, it has a much longer way to go,” said Morse.

“HMRC faces a considerable management challenge if it is to meet its commitments to increase revenue by stepping up its anti-avoidance and anti-fraud activities. It needs to strengthen its own efforts in tackling avoidance. But it also requires the help of legislators and changes in international tax rules, if it is to respond effectively to the ‘borderless’ internet world.”

Related Articles

Watch out when winding up

Corporate Tax Watch out when winding up

2m Emma Rawson, ATT Technical Officer
HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

5m Emma Smith, Managing Editor
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

9m Emma Smith, Managing Editor
OTS report: Corporation tax should follow accounts

Corporate Tax OTS report: Corporation tax should follow accounts

11m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

12m Emma Smith, Managing Editor
Spring Budget 2017: Making Tax Digital

Business Regulation Spring Budget 2017: Making Tax Digital

1y Shereen Ali, Deputy Editor
Tax fraud loses HMRC £16bn

Corporate Tax Tax fraud loses HMRC £16bn

1y Emma Smith, Managing Editor
HMRC nets £2.6bn in corporate tax from big businesses

Corporate Tax HMRC nets £2.6bn in corporate tax from big businesses

1y Accountancy Age editorial