What does everyone think of this? I think some will be upset.
Discussion document on improving the operation of Pay As You Earn (PAYE) (Acrobat PDF, 120KB)
HMRC is trying to run before it can walk, or even stroll
I have had a quick look at the document and it seems to me that, however good or bad the proposals may be, HMRC needs to ensure that their current online procedures work ultra efficiently before emabarking on yet another process that could lead to errors on employees' wages.
in theory, it's not a bad idea
but in reality:-
1. the current service from the Revenue is ****poor to say the least
2. I'll be earning less money
Heavily reliant upon massive changes to HMRC IT Infrastructure
My initial thoughts are:
1. The changes that would be required affecting HMRC IT Infrastructure would be massive. The country is still suffering a collective hangover from the changes over the last few years especially the competition by HMRC to see how many incorrect or duplicate coding notices can an individual recieve within a single year. The changes that caused this chaos were relatively trivial compared with the move to Real Time PAYE.
2. The investment on behalf of all but the smallest companies to implement Real Time PAYE would be significant.
3. This would mean that the era of having a chat with Sheila in accounts when a cockup led to one too many deductions would probably be no longer possible. Instead, PAYE-based staff would have to contact one of HMRC's delightful customer contact centers. This will inevitably mean that instead of a problem getting sorted by a credit in the next payroll or bank run, the problem would remain unresolved for months. In many cases the problem would only be resolved long after it occurred through the self assessment system.
In short, an excellent idea. The only problem is that HMRC are too incompetent to make it work. I suspect the "Real Time" aspect would be one-way only, fast-tracking money into HMRC's coffers, but very difficult to get corrections or refunds without fighting the dead hand of the bureaucratic state.
Absolute nightmare for small employers
I do the payroll for about 75 1 man companies - once a year. (salaries of £5715 pa). If I have to file monthly for them, I won't have time to do anything else.
This could work for the larger employers, but they don't seem to realise how many of the smaller employers operate.
Two onitial thoughts
1. This would be a very large IT project and they never deliver all of the benefits or cost savings that are promised. In addition to that, the Revenue have a track record of bungling every IT development they are involved in. Conclusion from that? The Revenue should not be allowed near anything as ambitious as this and ministers should take a much more sceptical view of their proposals than those of the previous government.
2. Philosophically, a state organ having access to so much data about each individual smacks of too much state control / 1984 / Big Brother / Soviet era (delete as you prefer). This would be another brick in the wall of continuing erosion of personal privacy to the god of centralised data storage. Is that the sort of country we want to live in?*
*Oops, what a daft question: it's clearly the sort of country the previous government and the ongoing civil service want us to live in.
Keep the comments coming...
Thanks for highlighting this paper. There are 7 other consultation documents for us to work through, so we haven't really had time to look at each one in much detail yet.
When George Osborne first floated the real time PAYE idea during the election, Simon Sweetman and other AccountingWEB members were not impressed. The then shadow chancellor was more overt about his intention that the calculations should be processed within the BACS system, which drew particular scorn from many members.
From what I can see, that element of the plan has been played down in the discussion document, but the question will still need to be resolved who controls the central system - and who is responsible for sorting out niggles and errors.
Gina Dyer will be looking at the PAYE proposals in more detail, so be sure to share your concerns with her here.
I haven't stopped laughing since I first heard this proposal from Osborne when he was in opposition and I'm still laughing now he's in government. Still, probably won't be much longer if the media are to be believed. He's living in a dreamworld if he believes the revenue can cope with this..