Up to £3.7bn of tax could be at risk because of errors on self assessment forms, according to a report from the House of Commons Public Accounts Committee.

A report out today (Tuesday) said some 46% of PAYE self-assessment returns were submitted on-line last year, significantly exceeding HRMC’s 35% target.

The number submitted electronically was also 29% up on the previous year.

But the committee warned that 34% of filed returns were inaccurate, putting £2.9 billion to £3.7 billion in revenue at risk. The majority is related to a small group of taxpayers.

There was also a warning that the number of returns filed before the 31 January deadline at 69% was well below the target of 93%.

The committee also voiced concern at a second delay moving taxpayer records from the existing PAYE system to the National Insurance Recording System, which will add to the 16.2 million taxpayer files which have been kept open, leaving taxpayers unaware that their tax record has outstanding queries which may result in an additional demand for tax or a refund.

MPs on the committee said the delay was ‘regrettable’ but added that HMRC must be absolutely sure the new system is working correctly before the switch-over takes place.

The change is required to cope with modern employment patterns where employees switch employer more often and frequently have more than one employer. The existing system is employer-based, making it more difficult to assemble information about the position of individual taxpayers.

Chairman Edward Leigh called for a strategy to eliminate the backlog ‘to be established and implemented with all speed.’