Large Business Office

Treasury written question – answered on 12th February 2004.

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Photo of James Gray James Gray Conservative, North Wiltshire

To ask the Chancellor of the Exchequer pursuant to his answer of 4 February 2004, Official Report, columns 934–35W, on future tax yield, what design methodology was used to produce the automated system introduced in April 1998 to calculate the compliance performance of the Inland Revenue's Large Business Office; at which stage in the methodology the design faults occurred and who authorised the faulty design to proceed to the next stage of development; whether the Large Business Office's compliance performance for the year 1998–99 has been correctly recorded in Inland Revenue Annual Reports to date; whether the new reporting system was tested prior to introduction against base data from recent years to ensure that the results produced by the new automated system matched those produced by the previous unautomated system; who signed for acceptance of the new system in 1998; when the integrity of the results produced by the automated system introduced in 1998 was first questioned, and by whom; upon what dates the errors were first detected; upon what dates the matter was brought to the attention of (a) the Director Large Business Office, Internal Audit (b) the Inland Revenue Fraud Champion, (c) the Commissioner responsible for the Large Business Office, (d) the Board of Inland Revenue, (e) the Paymaster General, (f) the National Audit Office and (g) himself; whether the automated system had a purpose other than to produce a single number recording the Large Business Office's total compliance performance; how many man days of effort were required to produce the automated system as introduced in April 1998; for how long it was under development; what programming language or software package was employed; and what the cost of the system to the point of introduction was.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

The Large Business Office (LBO) IT system was developed by a partnership of EDS and the LBO between October 1996 and November 1997 with a commercial software package, 'Composer'. The system cost £1.92 million including equipment and software licenses. The number of staff days of development is not now known. The system enabled the LBO to support and monitor their casework; it was formally accepted in 1998 by senior management of the LBO.

There was a credibility check of the data provided early in the use of the system, and in 2000, LBO senior management asked questions about data on some individual cases. The Director asked the Inland Revenue's internal auditors to review the accuracy of data for 2001–02. Their interim report enabled some adjustment to be made to the reported figures for that year and errors in reporting future years' tax effects were eliminated for 2001–02 onwards. A follow up review of processes commissioned in 2003 revealed that some LBO caseworkers were not reporting yield in line with departmental guidance.

The relevant Commissioner was kept fully informed throughout. The Board received a report on the issues raised by the 2003 review. Ministers were informed on 12 November 2003 of the need to correct yield figures. The NAO have discussed LBO yield as part of their current work on corporation tax. There is no information available for 1998–99.

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