The exchequer secretary to the Treasury, David Gauke, says that the government is determined to improve the system and introducing real-time information could reduce some of the administrative burdens on employers.
Under the current system, at the end of every tax year, businesses – including umbrella companies – have to spend time processing and distributing employees’ P60 documents. This a time consuming task and software technical support lines are often jammed with employers asking for advice on how to comply with government requirements. With real-time information, this onerous task would no longer be necessary; annual employer returns will be phased out and both HMRC and employers will benefit from reduced admin costs.
The new system will also mean that HMRC will be able to update its records automatically when a worker changes jobs.
As well as hearing the views of employers, HMRC would also welcome contributions from the payroll industry and software suppliers. The acting director-general of personal tax at the Revenue, Stephen Banyard, said that HMRC aims to work closely with customers during the development of the new system, which is due to be piloted from April 2012.
There is bound to be concern in some quarters over these changes. HMRC has not enjoyed favourable media coverage this year. The coding debacle earlier this year resulted in a large number of people receiving incorrect tax code notices and just recently the Revenue was criticised for sending out demands for repayment of rebates it had sent out earlier this year in error.
Although employers are likely to welcome a reduction in administrative work, HMRC must ensure the real-time information system is reliable and safe before it is forced on everyone.
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