By Alex Klaushofer
12th June 2009
A committee of MPs has roundly condemned Revenue and Customs for its failure to collect tax arrears.
In a report on June 9, Management of tax debt, the Public Accounts Committee concluded that R&C had been ‘slow’ to take advantage of widely used debt recovery techniques, such as risk-scoring its debtors and contacting them outside office hours.
Some 30% of tax payments were late, with £17.3bn outstanding in tax, interest and penalties at the end of 2007/08 – a 22% increase over the financial year.
PAC chair Edward Leigh said: ‘The department must try every means it can to tackle what is likely to become a growing problem of tax debt, while making allowances for people and businesses in temporary financial difficulties.’
The report argued that the department should reconsider its decision not to invest in an IT system that links taxpayers’ records. ‘Linking of debts is crucial to effective debt management, and R&C should introduce a staged programme towards that end,’ it said.
The MPs also criticised R&C for agreeing that compensation payments owed by contractor EDS should be contingent on the company winning new business from other government departments.
‘Government should not be placed in the invidious position of having to commission further work from the contractor in order to recover compensation for underperformance,’ the report said.
‘The arrangement by which the contractor EDS would pay compensation for its underperforming tax credits computer system… in practice did not work. It should never be repeated.’
