That's the headline on this story at Accountancy Age, anyway. For some time now, HMRC have been discussing getting more involved in the workings of PAYE system during the year. At present, employers pretty much operate the system as they see fit during the year, then make a return to HMRC at the end of the tax year summarising what they've done. If they've not paid all the tax and NI they're supposed to have done, or they've messed things up in some other way, HMRC can't really do anything about it until then - by which point the problem may be a year old, and the employer may be unable to pay. They've been discussed doing something about it - maybe monitoring tax due during the year, or even taking over responsibility for the calculations and onward payment of net pay to employees entirely - you'd just give HMRC the gross pay, they'd do the rest.
The accounting and business communities have not been very happy about this idea - somewhere between 'uneasy' and 'up in arms' depending upon where they are on the anti-HMRC spectrum. But, to be honest, there's some logic to it. We do sometimes see employers who've happily deducted tax and NI from their employees, but failed to hand it over to HMRC subsequently. Sometimes it's down to disorganisation, but sometimes they're just rubbish businesses. If those employers were forced to make a monthly return to HMRC stating how much was owed, rather than an annual one, the problem wouldn't go so far. If you're disorganised or inept, then you shouldn't be entrusted with your employees' money. By all means be self-employed and fail to pay your own tax, but don't take tax from others and then keep it.
The problem, of course, is practicality. Will HMRC be able to cope with the volume of work? In fairness, the online part of HMRC works pretty well at present - for us, at least. The paper-based side is under-resourced, but the automated side, bar a few quirks, is OK. So in-year reporting to HMRC seems like a good idea to me. But it's clear to anyone who has regular contact with HMRC that taking on a massive project requiring significant amounts of input by real people just isn't going to happen. They've not got the capacity, through no fault of their own. So, in-year reporting, fine, handing over responsibility for calculations - no thanks!
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