A review by the National Audit Office (NAO) has found that HM Revenue and Customs (HMRC) is facing a backlog of some 18 million tax cases.
The NAO reported that somewhere in the region of half of those cases concerned either underpayments or overpayments of taxes, with as much as £4 billion involved.
Amyas Morse, the NAO’s comptroller and auditor general, said: “The department has not made enough progress in reducing the backlog of 18.2 million income tax cases where there is potentially overpaid or underpaid tax.
“It also needs to improve its collection rate for tax credits debt, which is substantially lower than that for tax debts.”
The NAO report covered the 2009-10 financial year and noted that tax debt collection had improved, with the amount outstanding falling by £1.6 billion to £26.1 billion.
The amount of overpaid tax for last year could total as much as £3 billion, while underpaid tax could be £1.4 billion.
Although conceding that more needed to be done to clear the backlog, HMRC pointed to a reduction in its budget.
A spokesperson said: “Just like every government department we are going to have to do more with less and today’s report will help us to focus on those areas of our business that need to improve.”
