The Inland Revenue has said that computer problems were responsible for an estimated 134,000 basic rate taxpayers being overcharged by a total of £22m.
Individual taxpayers paid an average of £148 over the odds because of data transfer problems between the national insurance computer system operated for the Revenue by Accenture and the PAYE system operated by EDS.
The technical problems meant that, despite "significant administrative effort" the Revenue was unable to close over 2.5 million tax returns by December 1999, including 1.4 million records with no pay or tax details at all, according to a report from the influential House of Commons Public Accounts Committee.
Initially it was thought that the problems would result in a net loss to the Exchequer of £2m. Subsequent investigations indicated that it was more likely to have led to a net gain of £18m at the expense of the individual tax payers.
Difficulties in testing the interface between the systems before the National Insurance Recording System 2 (NIRS2) went live was highlighted as one of the causes of the data transfer problems.
An internal review by the Revenue recommended improvements in the way the IT service providers addressed issues of mutual interest, including procedures for dealing with problems and incident management.
A Revenue spokeswoman described the technical issues as teething problems. "This was a one-off in the NIRS2 system's first year and we don't anticipate any further problems of this nature," she said.
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