THE Exchequer is owed more than £1 billion in overdue income tax returns, the Whitehall spending watchdog disclosed today.

The National Audit Office said that young men, self-employed builders and people living in parts of London were among the most likely to return their tax self assessment forms late. The head of the NAO, the Comptroller and Auditor General Sir John Bourn, said that action was now needed by HM Customs and Revenue to deal with persistent late payers.

In its report, the NAO said that the Revenue had managed to stem the rise in the numbers of people filing their returns late, with more than 90 per cent of forms returned on time. However, the latest figures, from July 2004, showed that the Treasury was still owed an estimated £1.1bn in overdue payments.

The Revenue is now concentrating its efforts on those groups with the worst records.

These included young males, who were "consistently poorer at filing returns on time than females", participants in the Revenue's construction industry scheme, and people with East and East Central London postcodes, where just 76 per cent of returns were filed on time. In contrast, in the Orkneys - which had the best record - 95 per cent managed to get their forms in on time, while pensioners were also found to be "significantly more likely" to file their returns early. The NAO found that in 2003-04, that 6 per cent of the forms returned were subject to processing errors by the Revenue which resulted in £70m of undercharges and £50m in overcharges being made. Sir John said that changes introduced by the Revenue to simplify tax self assessment returns should help the situation.