CIOT: PAYE reforms being rushed

CIOT: PAYE reforms being rushed

CIOT: PAYE reforms being rushed

The Chartered Institute of Taxation (CIOT) has expressed concern that HM Revenue & Customs (HMRC) are rushing a huge IT project that will affect employers and employees across the UK.

The CIOT’s comments come in response to a government consultation on plans to require employers to submit Pay As You Earn (PAYE) information to HMRC in real time. The Government is to bring this in from April 2012. The CIOT believes that this is too short a timescale in which to develop, test and evaluate both HMRC’s systems and those of employers.

Anthony Thomas, CIOT Deputy President, said:

“This project has potential – but it also has the potential to go horribly wrong and, if this happens, the impact on business will be huge.

“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.

“The original focus of the Real Time Information (RTI) proposal was the desire – shared by all – to reduce administrative cost, for both employers and HMRC. The CIOT was supportive of this but reserved judgement until more detail was provided, because of concerns about the potential administrative costs of RTI for employers.

“The additional detail provided in the recent consultation gives us significant cause for concern.

“The consultation document acknowledges that many respondents to the previous discussion paper said introducing RTI from April 2012 was far too soon, so it is surprising that RTI is proceeding on this basis.”We are particularly concerned that the short timeframe in which RTI is being introduced will lead to significant administrative burdens for employers and uncertainty for employees.”

The CIOT also has concerns about the security of the data transfers to HMRC under RTI.

Anthony Thomas added:

“It is vital that there are proper security safeguards to ensure individuals’ personal information, such as bank account details, are not transmitted as well, and I am very concerned about this aspect too.”

Notes for editors

In its consultation document ‘Improving the operation of Pay As You Earn (PAYE): Collecting Real Time Information’, HMRC provided details of plans to require employers to submit PAYE information to HMRC in real time as part of the regular employer/employee payment process.

These proposals could provide benefits to HM Revenue & Customs, the Department of Work & Pensions, employers and employees. But introducing them in haste presents significant challenges for HMRC, software developers and employers.

In its response the CIOT recommended a longer testing and evaluation period in which to develop the required IT systems.

The CIOT believes that lessons need to be learned from the implementation of other projects such as iXBRL for Corporation Tax, which is currently causing problems across many businesses and agents, and that the RTI system, both from the HMRC end and the employer or agent end, should be running for at least 12 months before becoming compulsory.

The CIOT has also recommended that there be a phased introduction of RTI over a number of years, as applied for compulsory filing of end-of-year returns, and in-year forms.

2. The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.

The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members’ experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.

The CIOT’s more than 15,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.

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George Crozier
External Relations Manager

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