HMRC chief says tax code data is almost totally accurate

In response to pointed criticism of HM Revenue & Custom's IT record to date, acting director general of personal tax, Stephen Banyard argued that the integrity of the department's data has increased significantly, with the accuracy of tax codes submitted having increased from 80 per cent in 2009/10 to 98.2 per cent in 2010/11.

Banyard gave this detail during a Treasury Select Committee, called to debate the administration and effectiveness of HMRC and the controversial Real Time Information system. Other witnesses were Phil Pavitt, HMRC chief information officer, and Mark Holden, HMRC programme director.

The Real Time Information System is being built by HMRC to record employment data on a real-time basis. Banyard said the system will "improve new collection, improve accuracy of PAYE and help reduce fraud".

The reduction in tax code errors presented by Banyard were given as a response to a quote from HMRC permanent secretary Dame Lesley Strathie, who had argued previously that following the well-publicised tax code errors of 2009/10, the biggest problem for HMRC was that of "data quality".

Banyard explained that the codes are more accurate now because each batch is tested against the customer (or employer) record.

Other measures are also being introduced to improve the accuracy of the codes. These include the introduction of 50 customer relationship managers to work with employers and ensure their accuracy, as well as a series of additional cleansing exercises – these were not detailed during the meeting.

The chair of the committee also suggested that the £100m provided by the Treasury for the creation of the RTI system was a "suspiciously large and round figure". He cited Strathie again, who had said in a previous committee meeting that she considered the RTI a "high-cost, high-risk" system.

Banyard conceded there were risks attached to RTI but that the department wouldn't have committed to a timetable it couldn't meet. The RTI system is due to go live in September 2013.

The risks were acknowledged as related to the cost and length of the contract, with high cost and long contracts with suppliers generally acknowledged to be characteristics of other problematic government IT projects.

RTI has been procured via the ongoing Aspire contract signed for the third time in 2009 (the first version was signed in 2004).

Aspire is a framework agreement through which the government can buy services from approximately 400 suppliers. The framework is managed by system integrator Capgemini.

In terms of the costs, Pavitt explained that although 70 per cent of the £100m paid for RTI would be spent on IT, several clauses had been put into the Aspire contract with the aim of keeping a lid on rising costs within the system.

These clauses have been incorporated with the acknowledgement that as technology ages and a system's IT estate grows with additional software, it becomes more expensive.

First, there is a ‘cost not to exceed' clause, which means that every time a change is made to add to the system, the suppliers must decommission aging parts of the system.

Second, the Aspire contract compels suppliers to renew hardware on a regular basis to 2017 to ensure it doesn't become too expensive to run.