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Will the Universal Credit system benefit contractor accountants?

Will the Universal Credit system benefit contractor accountants?

Contractor accountants keeping tabs on the government’s plans for a Universal Credit system might be unsurprised to hear that might be delayed.

The government was keen to introduce the new system in 2013, but the Revenue does not think it will have adequate real-time ICT systems ready by then.

HMRC were allocated an extra £100 million in the Comprehensive Spending Review to build a new system that could cope with tracking people’s job changes and form the basis for a universal credit benefits programme. However, last week the Public Accounts committee were informed that delays were possible as HMRC may not have the necessary systems in place.

The Department of Works and Pensions will need to extract information from the Revenue in order to commence the universal credit programme. Welfare reform requirements dictate the speed at which the technology needs to be built and these new requirements are a big job, Dame Lesley Strathie said.

The new system will also sort, identify and crystallise tax amounts owed and then translate them into the correct tax codes quickly. For the tax year 2007/08, HMRC estimates it could be owed up to a billion pounds in back tax and if you go back over the last five years, the Exchequer could have received around £40 billion less than it should have. A large portion of this figure is probably due to tax avoidance, fraudulent activity and organised crime, the Revenue believes.

There have been concerns over the implementation of real-time systems not least because of the of incorrect tax codes that were sent out earlier this year. However, Dame Lesley admitted that this was more down to the quality of the data that was fed into the system rather than the actual software.

HMRC’s financial controller, Jon Fundrey, said that IT work had been held up slightly due to the government moratorium on significant ICT spending. The same was true of IT recruitment but this is now underway.

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Image: Endless Candy by *PaysImaginaire*

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