The Inland Revenue is to clean up its databases following an admission that poor quality data is causing problems.
Paymaster General Dawn Primarolo told a Treasury subcommittee that incorrect data held on the databases is causing delays and resulting in incorrect decisions.
"We need to continue to clear the databases," she told MPs. "It is a question of the databases now being expected to do more than was originally intended and needing to be improved."
Primarolo explained that the "crucial" PAYE database was built in the mid-1980s on a regional basis.
"We needed at that time a national database, but it was not possible [because] technology did not enable the Revenue to develop it," she said.
The regional structure sometimes caused problems, Primarolo added. For example, when people have jobs in different places, the way the regional databases collect this information does not always give the Revenue a complete picture.
Another problem occurs when people move home without telling the taxman, and then send in a self-assessment return from the new address. The database may not recognise the details and issue a penalty to the old address.
"Each time the Revenue has developed databases they were the best that could be done at that time," said Primarolo.
"As we move on in terms of the demands from our customers, the [databases] do not always provide the information our customers want, or that we might want [in order] to give our customers the best service."
According to its expenditure plans for 2002/2004, part of the Revenue's medium-term strategy is to expand its electronic services and clean up its current databases.
As part of its plans for 2002/03 the Revenue said: "The successful introduction of the new Child Tax Credit and Working Tax Credit is the department's top priority for 2002/2003.
"As part of the preparations, we will be taking the opportunity to clean up our computer databases, which will also provide substantial benefits for other processes, and ensure that they remain clean."
The Revenue is also working on the development of what it calls an 'Integrated Citizen Tracing Facility' which will create a single view of a citizen across the Revenue and the Department for Work and Pensions.
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