The Dutch tax office has built up a backlog of more than 25,000 fraud enquiries in the last two and a half years because of problems with replacing its discredited IT system.

Tax officials have been unable to follow up tips because the successor to the Fraude Signalering Voorziening (FSV) still does not comply with privacy law, NRC reported on Tuesday.

The widespread use of the FSV to identify fraudsters was a key component of the childcare benefits fraud scandal, which prompted the resignation of the last cabinet in 2021.

The tax office was fined €3.7 billion by the privacy agency AP for illegally retaining and sharing personal information on the FSV, which has not been used since February 2020. Letters were sent to around 60,000 people whose details were stored on the system.

The two ministers given the task of sorting out the aftermath of the scandal, Hans Vijlbrief and Alexandra van Huffelen, said in April 2021 that the replacement system, the Tijdelijke Signalisering Voorziening (TSV) or Temporary Indication Facility, had been ‘delivered and [would] soon be put to use’.

But the AP told the tax office in July that there were still ‘big steps’ to take to make the system ‘legally compliant, suitable and transparent’ and strongly advised the tax office not to bring it into service.

‘Millions of euros’

In August junior finance minister Marnix van Rij ordered the implementation of the TSV system to be halted in order to address the AP’s concerns. He is due to give an update to parliament later in the autumn.

The tax office declined to answer questions about the delays in implementing the new systerm, but confirmed that it was unable to follow up incoming reports because of the lack of a reporting system.

The backlog mainly consists of tip-offs from individuals and companies about possible fraud, but in some cases the amounts involved run into millions of euros.

The tax office’s fraud detection branch FIOD is still able to process tips and instigate inquiries using its own IT system.

‘Since the FSV was stopped, reports that were previously registered in the FSV are no longer acted on while we wait for a (positive) assessment from the data protection officer (FG) or the personal data authority (AP),’ a spokesman said.