Tax and Benifits, a Joined up Idea

I've recently had the misfortune of trying to apply for working tax credits, and responding to a letter from the HMRC about possible overpaid NI contributions, giving me a fascinating and terrifying view of the tax/benefit system. To be honest, it seems to be engineered to try and put you off claiming, and I do wonder if this is the idea.

I received a letter from HMRC asking about how much of various types of tax I have paid, which involved trawling through files for P60 forms and the like. My thought while doing this was "Hang on, I Pay tax to you, and you don't know how much I'm paying, that can't be right?" Similarly, when my wife applied for Maternity allowance and applying for working tax credits, we're using our best judgement to tell one government department what another could tell them definitively.

I'm not asking for a huge database, while a good idea in principle we know how good the Govt are at IT projects. No, what I'd like is a little communication between departments. Think of how this could work. I start off single and living with a parent earning money. The Government knows my address and knows the other person there is someone with the same last name. I'm doing not badly at work and buy a small flat. My name is updated to the flats address on the electoral roll, and as I'm the only name associated at that address so I qualify for single persons allowance on my council tax. The electoral register will in fact track anyone of voting age who lives with me. I get married, there's a record, I loose my job, the tax office know and should really start unemployment processes. I get another job, similarly they should now know. I have a child, the Benefits agency should know from the register of births, and be able to ask the Tax office about my household income and be able to work out what benefits I am due. All it takes is for government departments to actually work together.

Now naturally this does somewhat fall apart if my work is cash in hand, but if I work for a company properly, on the books My tax is taken from me before I see a penny of my wage. This could reduce fraud and errors by automating much of the system and removing the human element.

As an extra boon I would also have the rule that if the benefits office overpay you, unless it can be proved that you willfully submitted incorrect information, you keep the money, however if you are underpaid they have to make up the difference. I think we would see fewer errors if the office was given some sort of incentive to get things right first time. Currently its the end user who suffers from any and all of their mistakes and incompetence.