Online tax return plan branded expensive failure

A Government programme to enable taxpayers to file their annual returns electronically has proved an expensive flop, despite a television advertising campaign featuring a character from the TV series Father Ted.

Fewer than 50,000 people have used the new internet service, which has cost the taxpayer £16m since it was set up for the previous financial year. Each return filed over the Net has so far cost an average of £320 to administer – more than the tax paid in many cases.

The Inland Revenue has launched a television advertising campaign to try to bolster the service. In the adverts, which will run until January, Mrs Doyle, the fictional housekeeper played by Pauline McLynn, is shown tapping at a keyboard and urging taxpayers: "Go on, Go on, Go online."

Opposition MPs accused ministers of frittering away taxpayers' money.Matthew Taylor, for the Liberal Democrats, said: "Spending millions of pounds on a system that hardly anyone is using is hardly a good use of government money. Many people will pay less in tax than it will have cost the Government to process their tax return."

It cost £10m to set up the internet facility and £3m a year to administer. But last year, of the 8.6 million tax returns filed in Britain, only 39,000 were over the Net – despite a £10 discount on the tax bill as an incentive to use the service.

The Inland Revenue said the internet service offered to taxpayers was in its early stages. "From small acorns grow forests," said a spokesman. "We are offering more than electronic returns on our internet site. We are looking into the future."

This is the latest setback for the electronic tax-filing system, which critics say has been dogged by technical problems from the start.

Figures from the Commons yesterday revealed that 11 out of 14 IT projects commissioned by the Lord Chancellor's Department were over-budget.