The UK government’s highly criticized tax credit system is struggling due to the flawed IT system it is dependent on.
This is the finding of a House of Commons Public Administration Committee report which follows on from the preliminary report published in June 2005.
The IT system was meant to be a fully automated, delivering tax credits in an efficient and expedient way. Instead the report indicates that its fully automated nature prevented HM Revenue and Customs from dealing effectively with the problems it created.
The report also highlights the inflexibility of the system which prevented it from dealing with the needs of individual customers. Software errors were further blamed for the misallocation of tax credits in hundreds of cases.
In all, the report noted that not only was the system the principal cause of many of the problems reported in the media, but that it had also become a significant barrier to their resolution.
It admits that the problems cannot be addressed without significantly compromising the system. Instead it simply recommends the government to be a little more careful in the future.