Written by Richard Rowell
Published on September 7, 2010

This was the claim made when in late July the government launched a consultation on radical plans to overhaul the PAYE system.

There consultation covers two key elements. The collection of real time information and the centralisation of deductions. Under the proposal HMRC would effectively become the "payroll department" for the country.

One of the key claims is that with the government at the helm it would make it easier to ensure that individuals pay the right tax and that there would be a more accurate.

As you would expect this has caused a huge debate in the payroll industry and the early conclusions are that many people support a real time tax system with up to date information about all of the UK's employees. Although the present P11D system will need to be overhauled to do that.

As for the HMRC actually centraly calculating the tax / NI, there seems little support. Payroll departments and outsourced payroll providers across the UK perform many functions beyond calculating tax and NI. Can you imagine having to contact HMRC for an advance on your wages to cover a mortgage payment!

From this corner of Lincolnshire all we can see are problems with the proposals. A case in point being the recent disastrous scenario of 18.2 million open unresolved cases from HMRC resulting in hundreds and thousands of under/overpayments.

Is this proposal a recipe for disaster. We firmly believe so!