PAYE & Forthcoming changes

H M Revenue & Customs are proposing to change the reporting requirements for the PAYE scheme in an attempt to avoid perceived abuses

 

Current Scheme

• Employer responsibility to determine tax and national insurance.
• Employer responsibility to make payment of tax and national insurance deducted to H M Revenue & Customs.
• Payments are made monthly or, if average below £1,500 per month, every quarter.
• Employer responsibility to report details of deductions etc. on an annual basis.

 

Perceived abuse

• Cash flow advantage taken by employers.
• Employer can determine payment regardless of the actual deductions.
• Deductions legally belong to the crown.

H M Revenue & Customs proposals

• Monthly reporting of deductions made by reference to individual taxpayers.
• Allocation of payments and deductions to individual records.
• Imposition of penalties for late returns.
• Penalties for late payment of PAYE & NI.

Problem areas

• Requirement for software to produce information.
• Correction of errors.
• Costs to employer.
• One off payments.

 

"Employer responsibility to make payment of tax and national insurance deducted to H M Revenue & Customs."