Exclusive: Staff paid to go home as outsourced HMRC IT system fails

MILLIONS OF POUNDS have been squandered on staff working on an outsourced HMRC tax credit contract who did no work for nearly three months because of a systematic IT failure, Accountancy Age can exclusively reveal.

Some 600 newly-recruited staff in Belfast, employed in a £75m, three-year outsourcing deal by US business services giant Concentrix, were tasked with checking up on erroneous or fraudulent UK working tax credit payments.

A Concentrix staff member told Accountancy Age that, having received three weeks of training in August last year, the employees were informed that the system would go live on 1 September. But come the start date, staff were told that its computers couldn’t ‘talk’ to HMRC’s wider system on the mainland.

The staff, with an average full-time salary of £15,000, were subsequently told to ‘clock in’ for duty once a week for a few hours to see if the system was operational, and when, each week, it was not, they were sent home and paid 75% of their full-time wages – 30 hours out of 40.

This went on every week throughout September, October and November. It only went live on the first week of December – three months late. It means that around £2m was wasted on wages for the IT bungle, in that timeframe alone.

All 600 staff are based at the former HMRC office Orchard House – now renamed Concentrix House, in Fountain Street, Belfast, closed as part of the taxman’s recent Northern Ireland estate rationalisation programme.

Concentrix’s cost

A source with knowledge of the project told Accountancy Age: “Concentrix and HMRC did all that was in their power to get the project off the ground as soon as possible. All costs, including employee salaries, were absorbed by Concentrix and not the taxpayer.”

The scandal marks the latest in a litany of HMRC IT blunders and poses wider questions about opening up such contracts to the private sector while laying-off, through redundancy, trained HMRC personnel.

Recent HMRC IT gaffes have included major flaws with its PAYE and National Insurance computer systems as well a number of errors emanating from its £270m ‘Real Time Information’ (RTI) programme.

In 2011, the Public Accounts Committee (PAC) slammed HMRC for PAYE software errors that it claimed contributed to depriving the government of £1.4bn in unpaid taxes and “caused unacceptable uncertainty and inconvenience to the taxpayer”.

Last month the PAC warned that the tax system could be left in “havoc” due to HMRC’s complacency on IT maintenance as it looks to replace its Aspire contract.

An HMRC contract award notice about the Concentrix deal, published in June, revealed that ‘the price paid for the services will be based on commission on the losses prevented; which are estimated to be between £55m to £75m’.

It went on to state that the “exact commission is confidential commercial information that could prejudice the commercial interests of the successful supplier and therefore we will not be disclosing it”.

A Concentrix spokesman said: “Our project with HMRC is now fully operational. We value our staff and are committed to delivering a professional and efficient service to our customers.”

In April last year, Concentrix secured a £3.5m grant to set up in Belfast from the Northern Ireland Executive.

In the year to 30 November, Concentrix reported revenues of $1.1bn (£715m).

Concentrix, owned by parent company Synnex, has recently established a base in Gourock, Scotland, having secured a £2.1m regional selective assistance grant, stating that it expected to create around 500 jobs with IBM.

An HMRC spokesman said: “Concentrix carries out routine tax credit checks on behalf of HMRC, to ensure that people receive the money they’re entitled to. Last year alone, checks just like these led to corrections to awards of more than £700m.

“The company is not paid on the number of letters issued, staff employed or days worked, but on the basis of savings to public finances arising from correcting tax credits claims that are actually incorrect.

“We know how important tax credit money is, and are trying to ensure that people are paid the correct amount of money. We only contact people where we have an indication that information may be incorrect. We are working closely with Concentrix to ensure it carries out these checks accurately.”