PAYE changes being rushed, warn pro bodies

Plans to overhaul the operation of the PAYE system have come under renewed criticism from professional bodies, which have raised concerns about the speed at which the changes are being instigated and the manner in which the taxman will handle them.

The Chartered Institute of Taxation (CIOT) has expressed concern that the Revenue is ‘rushing a huge IT project’ that is being carried out with the intention of employers submitting PAYE data in real time from April 2012.

This is too short a timescale in which to develop, test and evaluate both HMRC’s systems and those of employers and software providers, said the CIOT, whose deputy president, Anthony Thomas, warned of ‘the potential to go horribly wrong’.

‘HMRC’s record of managing big IT projects is not good, and if they insist on rushing this reform through then it will look to many people like an accident waiting to happen,’ said Mr Thomas.

‘We are particularly concerned that the short timeframe in which RTI [real time information] is being introduced will lead to significant administrative burdens for employers and uncertainty for employees.

Lessons need to be learned from the implementation of troublesome projects such as iXBRL, said the CIOT, which suggested that the RTI system be operational for at least 12 months before being slowly phased in as a compulsory requirement on firms.

The Institute of Chartered Accountants of Scotland (ICAS) questioned whether the PAYE revamp should go ahead at all, calling it ‘unwise and ill-conceived’ and adding that the majority of the body’s member are ‘fiercely opposed’ to the proposals.

‘They believe the recent failings of the long-established PAYE regime have been due to maladministration by HMRC and their inability to adapt the system in relatively modest ways to cope with changing circumstances, and that these issues need to be addressed first,’ said the insistute.

Assistant director, Donald Drysdale, added, ‘There is no reason to believe [the Revenue] would be any more successful in clearing the much greater number of reconciliations potentially arising on a monthly or weekly basis under RTI.’

He advised that the project, if instigated, be approached at a more cautious and measured pace than currently set by the taxman.

‘The proposed timetable… is over-ambitious to the extent of recklessness. It disregards generally accepted IT best practice and fails to allow adequate time for testing and piloting by HMRC, commercial software vendors and employers.

‘Proceeding on the basis suggested would risk the success of the project, creating a strong possibility that it might share the embarrassing and costly fate of many other failed public sector IT schemes in recent years,’ said Mr Drysdale.

Categories: News , CIOT , ICAS , PAYE revamp , Admin , Employees , Income Tax