Computer Glitch May Affect 'Hundreds Of Thousands' Of UK Taxpayer Records

by Robert Lee, Tax-News.com, London

03 November 2004

It has been widely reported this week that the Inland Revenue is investigating a computer error which has caused an unknown number of taxpayer files to be deleted, and may have led to hundreds of thousands of people paying the wrong amount of tax.

The files were apparently removed by a “well established and accepted" housekeeping system before the Revenue carried out its usual final review to check whether any tax remained over or underpaid for the relevant year.

The correct purpose of the housekeeping system was to remove files from the system on taxpayers who had left employment and remained without a job for a period of more than three years. The error is likely to affect PAYE taxpayers and those who receive income without tax deducted.

Condemning the Revenue’s procedures as “sloppy”, Richard Bacon, a Conservative member of the House of Commons Public Accounts Committee, told the auditor general Sir John Bourn, the head of the National Audit Office, that the glitch could have easily affect hundreds of thousands of taxpayers.

"How an organisation doing something as important as the Inland Revenue can be so sloppy as accidentally to delete potentially large quantities of data is difficult to understand," remarked Mr Bacon, according to the Daily Telegraph.

The fact came to light in the NAO’s report on the Inland Revenue’s accounts last month, in which a small paragraph in the 40 page report alluded to the practice which has gone undetected “for a number of years.”

Mr Bacon has asked the NAO to investigate the issue.

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