It might work...
Every employer in the country is about to face the challenge of a big change to PAYE. HM Revenue & Customs have been testing the new Real Time Information system with selected employers – including, to be fair, the department itself – but it’s a huge jump from a pilot scheme to ‘everyone in the country’. Most businesses are stretched by the recession, and HMRC are facing the same cuts as the whole public sector. This won’t be easy.
The problem is that there’s a big slope in the playing field. If businesses fail to deliver their side, they’ll get warnings from HMRC and, sooner or later, penalties. If HMRC find their system doesn’t work in practice... it’s once again businesses that will suffer, because of the confusion, delay and extra work it will take to sort out the mess.
We don’t have a choice: we need to make the new system work as well as it can, to avoid penalties and to avoid hassle. One problem is that it’s new and it’s coming soon, and some people are only now finding out about it – often through rumour and myth. Some of the stories in circulation are explained below.
Meanwhile, there are plenty of other potential hazards in the tax system. Whether HMRC manage to re-invent PAYE smoothly or not, we will be here to help you through the minefield.