Attempts by the Inland Revenue to persuade taxpayers to submit their returns online are doomed unless it can dramatically improve security and reliability of electronic self-assessment, MPs warn today.

Technical teething troubles, and a security breach allowing personal tax details to be viewed by other users, have sapped public confidence, according to the Commons public accounts committee.

Its report concludes that the 50% take-up target of online self-assessment by 2005 is unlikely to be met, as fewer than 80,000 users - less than 1% - are filing returns electronically so far. An initial £10 bonus offered to taxpayers switching from paper to screen was abandoned.

MPs want more incentives and consultation with users, and for future systems to be more rigorously tested.

The report found that the Inland Revenue did not have a "full grip" of the costs and potential benefits of its £200m electronic strategy and called for a "rigorous assessment of the cost-effectiveness" as part of the shake-up.

Taxpayers' reluctance to file returns online has endured despite an expensive advertising campaign featuring Mrs Doyle from the TV comedy series Father Ted. The system cost £10m to set up and at least £3m to administer each year, plus £4.4m on advertising - which makes the 115,000 returns filed online over two years significantly more expensive than the paper ones.