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HMRC is projecting a total £11.5 billion benefit from increased tax yield and reduced bureaucratic costs by the time the programme is complete in 2011, though the National Audit Office report warned that this figure was "volatile", as it assumed tax would be collected in full.

The NAO also warned that morale at the HMRC - which collects taxes and administers benefits including tax credits - was at a "low ebb" because of the disruption caused by the changes.

It recommended that HMRC should do more to "actively demonstrate the benefits to its staff" of the programme of change.

Auditor General Tim Burr, the head of the NAO, said: "This is an ambitious programme of change with the potential to provide significant benefits in terms of tax yield and improvements for the department's customers.

"To succeed, the department must determine what it expects the programme to achieve with the resources available. It should also establish that the planned benefits are realistic and confirm each year that those achieved are robust."

http://www.hmrc.gov.uk(HM Revenue and Customs)