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£11.2bn could be lost

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A decision to delay investment in a new IT system means the taxman has a poor grasp of the billions he is owed, according to an influential group of MPs.

The Public Accounts Committee today said some £11.2bn was at risk of being lost to the Exchequer because HMRC deferred buying a new debt management system in favour of "other priorities".

"Weaknesses in the Department's existing systems prevent it from analysing debts by age and value and from calculating a taxpayer's total debts across all taxes," the PAC said.

The MPs recommended HMRC reconsider its decision and replace its debt management system.

"An effective debt management system would improve the Department's ability to recover debt by providing a profile of debt across taxes by age, value and risk of recovery," they said.

"With £11.2 billion at risk of non-recovery, the benefits of investment in a new system could easily outweigh its cost."

The PAC was also critical of a backlog of 17 million Pay As You Earn cases awaiting processing. It said HMRC should aim to clear it by March 2011.

The full PAC report is here. ®

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