Employers may be relieved to pass over employee tax calculations to HMRC but experts are not convinced that a centralised tax system will work efficiently in the UK.
Under a proposal released last week, the Revenue explained that employers would use the electronic payment system to send gross payments to a central calculator where HMRC deductions would be calculated automatically. Net pay would then be sent to an individual’s bank account and the Government would receive the deductions.
The Institute of Payroll Professionals surveyed its membership about the proposals and discovered that although members support the idea of real time information, they are opposed to centralised deductions.
Based on the survey results, the IPP has now submitted its recommendations to HMRC.
The Institute would like to see a full consultation process on the requirements and regulations of real time data started as soon as possible. It also thinks that real time data should be introduced for a minimum of five years before other options, such as centralised deductions, are considered. This would give plenty of time to evaluate whether real time data solved the problems of incorrect tax positions.
Real time data would be transmitted via the current BACS system and just over a third of the survey’s respondents believe this would add an additional burden to their company.
The only aspect of HMRC’s proposals to meet with approval from the majority of the IPP members is the abolition of the end of year P45/P46 process. 67% would be in favour of such a move.
© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: Street life by zaqi
