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Company bosses today expressed grave concerns about an ‘unacceptable’ aspect of the Government’s plans for enhancing the country’s PAYE operations, which are currently at the centre of controversy following errors that have left around 1.4 million individuals owing income tax.
The Institute of Directors (IoD), a non-party political body that includes CEOs of large corporations among its members, said it welcomed the initiative to improve the system, ‘so that it gets to the right amount of tax more often, and extra tax demands are not needed’, but the organisation went on to attack proposals for a centralised Revenue calculator that would handle gross wages and then pass on net pay to workers.
Such a set-up would be ‘completely unacceptable’ said the IoD, adding that ‘sooner or later, the system would break down, and some people would not get paid. That would be a major embarrassment for HMRC and a disaster for the employees affected, and for their relationship with their employers.’
In its response to the Treasury consultation paper Improving the Operation of Pay as You Earn, the IoD states it is ‘implacably opposed to the suggestion that money might flow via central calculator, instead of flowing directly from employers to employees’.
The organisation agreed welcomed the proposals to make use of real-time information and centralised computations of amounts due, but warned that ‘we must make sure that the net effect is to reduce burdens on employers, not increase them’
Head of taxation Richard Baron added: ‘The document contains a lot of good ideas, but the idea that HMRC should be trusted with the gross pay of employees is not one of them. The benefits of the proposal can be obtained by other means… without the wholly unnecessary risk.’
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Bosses say no to PAYE calculator plan
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15 September 2010
IoD: central computer is unacceptable
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As HMRC are culling another 5,500 staff in the foreseeable future and the self assessment computer system is overloaded, how do they propose to be able to cope with their suggestions about running a national payroll dept?
It should be remembered that HMRC are servants of the state and it is the taxpayers who should decide the matter, not the Revenue. Government should listen to representative bodies such as the FSB and the IOD.
PAYE is a 20th century system (1940s) that has outlived its usefulness. We should consider using the American system, which involves all employers. Maybe a performance bond has to be put up by the employer to act as a representative of HMRC in the collection of payroll taxes. Otherwise, the operation of the payroll tax should go through an independent, recognised body, such as the Institute of Payroll Professionals, which would have a performance bond in place as a minimum requirement.
The latest proposal is NOT workable. It is the system that needs to be closely looked at. Representations should be made to government to desist in such an approach. It smacks of Big Brother and may be likened to a communist-style approach.
It should also be noted that HMRC have circa 40 million unanswered calls and 1 million unanswered letters at this time. The question that one must ask is, how are they going to cope operationally?
This is another attempt by HMRC to control people's income stream; they should get their house in order with the latest PAYE fiasco, which, I might add from a technical viewpoint, taxpayers may not have to pay the back payments.