HMRC should not rush its planned computerised PAYE reforms according to leading professional bodies.
The Chartered Institute of Taxation and the Institute of Chartered Accountants in Scotland have both expressed concern that the Revenue is moving too quickly on Real Time Information.
Anthony Tomas, the deputy president of the CIOT, said the Real Time Information project has potential but the downside is that it could go horribly wrong and if that were to happen, it would have a huge impact on business.
HMRC does not have a good record of managing large IT projects. If it insists of rushing through this reform, many people will see it as an accident waiting to happen, he added.
The assistant director of tax at ICAS, Donald Drysdale, pointed out that HMRC have been unable to reconcile annual PAYE and NICs and there is nothing to suggest that they would be able to cope any better with reconciliations on a monthly or weekly basis.
The proposal to connect banking systems with the PAYE system is also causing concerns. BASDA, the technology trade body, says that although the proposal has merit, problems might arise with functionality.
A spokesperson for BASDA pointed out that the Revenue does not appear to have considered that the banks will need to reform their technology and many organisations will be to restructure internally in order for implementation to be successful. The organisation also warned that the new system would be unable to respond to any future changes in legislation.
The current Real Time Information plan will be extremely costly for a large number of businesses. Payroll software will need to be updated, all employers will need to use the BACS system and banks will need at least 2 years to come up with the correct systems. Currently HMRC hopes to have everything in place between 2012 and 2014. That timeframe sounds a little over ambitious!
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