HM Revenue & Customs has queued 35 million tax cases for manual processing, directly as a result of severe delays to a new IT system rollout.

Delays to the system, understood to be for processing PAYE cases, meant the number of open cases had more than doubled in a year from 16.2 million in 2008 to 35 million in 2009. In January, the Chartered Institute of Taxation warned that the new system was sending out the wrong tax codes.

Given the delays, the Treasury Select Committee wrote in a new report that it was “surprised” to see HMRC declare in its annual finances that it had been “hailed as a shining example of how to use technology to take government services to a new level.”

Nevertheless, the delays were owing to testing requirements, and a year ago the committee said it was “prudent” to have been thorough about testing before launching the system.

The select committee wrote in its report, ‘Administration and expenditure of the chancellor’s departments’, that HMRC needed to improve its IT quickly because future performance was “highly dependent” on the systems.

The department had said that 92 of its systems were “critical” to core processes, but the committee noted progress on system improvement had been “uneven”, in spite of substantial investment.

Last October, HMRC renegotiated its multibillion-pound Aspire contract with suppliers Capgemini, and subcontractors Fujitsu and Accenture, cutting £180 million from annual costs. The department’s chief executive, Leslie Strathie, appeared “bullish” about the new arrangements and how they would help HMRC, the committee noted after a hearing for the report.