Treasury committee slams Inland Revenue failings

24 Jul 03
A strongly-worded report by the Commons Treasury committee has questioned the competence of the Inland Revenue's leaders. MPs looked into the tax credits backlog fiasco, the unauthorised suspension of national insurance contribution deficiency notices

25 July 2003

A strongly-worded report by the Commons Treasury committee has questioned the competence of the Inland Revenue's leaders.

MPs looked into the tax credits backlog fiasco, the unauthorised suspension of national insurance contribution deficiency notices and the department's repeated failures to inform ministers of problems.

Their report, published on July 23, said: 'The inquiry has raised serious questions about how the department has been led.'

Michael Fallon, who chaired the investigation, said: 'Our report sets out a catalogue of significant administrative failures by the Revenue which Treasury ministers must address as a matter of urgency.'

The report said the Revenue had struggled to cope with the introduction of new tax credits. At the start of July, 220,000 applications were unresolved and more than 200,000 emergency payments were made.

MPs were startled to learn that the IT problems that caused this backlog had come as 'a bolt from the blue'. They said the Revenue had 'a clear duty' to pursue a compensation claim against supplier EDS and warned that any costs incurred through the contractor's failings should not be borne by taxpayers.

Unauthorised suspension of NI deficiency notices in 1998 was among failings which 'suggest the National Insurance Contributions Office has been acting as a law unto itself,' the report said.

The MPs said that contracts of the size of the controversial Mapeley Steps deal, in which Inland Revenue and Customs & Excise estate were sold to a company in a tax haven, should have been approved by ministers.

It was 'unacceptable' that Revenue chair Sir Nick Montagu and paymaster general Dawn Primarolo had given the committee conflicting evidence over whether bidders' tax haven status could be taken into account in future awards of government contracts, they added.

An Inland Revenue spokesman said it would learn from the report. 'We now have 4.25 million tax credit payments made and people are getting through on the helplines. We think we are delivering to the public.'

He said that Montagu had already apologised to Primarolo for keeping her in the dark about the Mapeley Steps deal, and said the failure to tell ministers about the deficiency notices arose from a wish to 'go to them with a solution. not a problem'.

'You have to look at the Inland Revenue's leadership in the context of a period of profound change,' he added.

PFjul2003

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