Outsourced HMRC IT tax credit system saves just £500,000

AN OUTSOURCED IT company engaged by HM Revenue & Customs to provide additional capacity to tackle tax credits fraud and error has fallen £284.5m short of its savings target.

Synnex-Concentrix UK was hired on a payments-by-results basis with the aim of increasing the number of compliance interventions. So far, the benefits of the contract have been “lower than anticipated”, according to an assessment by the National Audit Office.

“Delays in the service going live” and a lower-than-expected number of interventions completed by the supplier were cited by the NAO as key reasons for the meagre savings. In February, Accountancy Age revealed Concentrix staff did no work for nearly three months because of a systemic IT failure.

HMRC estimates that the project delivered savings of £0.5m in 2014/15, compared with its original forecast of £285m.

The original estimate of £1bn in savings over the three year contract is not achievable, the NAO found. HMRC currently estimates that the project will deliver savings of £423m, although that is reliant on increasing staff numbers and improving performance.

A Concentrix staff member previously 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.

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. They were eventually able to work fully in the first week of December.

Sir Amyas Morse, head of the National Audit Office, said: “Over the last parliament, HMRC met its strategic objectives to increase tax revenue while cutting its administrative costs. However, it made less progress in improving customer service, the standards of which still fall well short of that expected by taxpayers.

“HMRC is one of the strongest government departments for managerial competence but it will need to rise to the significant challenges ahead.

“It has ambitious plans to modernize tax administration in the coming five years but these carry substantial risks – in particular, as it introduces new digital services whilst replacing its Aspire contract for IT services, and faces the challenge of making further reductions in fraud and error on tax credits alongside managing the transition to Universal Credit.”