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The National Audit Office report into HM Revenue & Customs 2012-13 Accounts makes for grim reading for HMRC in parts - particularly in relation to the new Real Time Information (RTI) reporting system for PAYE.

While most readers will be inured to the fact that the audit has been qualified because of the level of error and fraud ( HMRC and Tax Credits: Public Accounts Committee Criticises HMRC - Again ) the report expresses real concerns over RTI:

• Certain functions of RTI have not yet been fully tested, due to low takeup in the pilot phase - only a quarter of the expected number of employers participated.
• There is no contingency for any significant extra development costs if further changes are now required
• The financial / accounting systems supporting RTI are not yet fully accredited
• There is no "resilience" to support RTI if there is a major technical failure.

But one of the costs of implementing RTI also deserved special mention: the original PAYE system had undergone significant changes in the years running up to the introduction of RTI, with millions of "open" taxpayer cases put on hold for years, pending installation of new software systems. In 2011 it was acknowledged that resolving or "stabilising" those cases was an "essential foundation" for the introduction of RTI. At point 2.8 of the main report, the NAO found that HMRC's best estimate of the tax foregone through the "stabilisation programme" to clear the backlog was £953 million.

While some taxpayers will undoubtedly be better off thanks to HMRC having written off their tax underpayments, it must raise some difficult questions of the decisions taken several years ago (and for several years running) to postpone the processing of those open cases for so long. It is to be hoped that this year's round of risks on RTI doesn't turn out to haunt the current HMRC executive over the coming months and years.