In several of our articles in the last year we have identified problems in the existing PAYE system, particularly for pensioners and students with multiple PAYE sources, which would, we suggested, be solved from October this year. The solution came in the form of a new computer platform, the PAYE Service, which joins together 12 existing HMRC databases.
By joining together these databases HMRC are then able to see at a glance the whole picture of the PAYE income sources of an individual and the tax paid on each. It also provides accurate information on age, national insurance number etc.
This joined-up approach reduces the likelihood of errors in tax codes and enables repayments to be identified easier.
HMRC are now deferring the introduction of the new service planned for October. No reason for the deferral is given in the announcement but the implication is that either the system has not been robust under testing, or that HMRC resources are so stretched that they could not cope with the manual adjustments which follow from running the new system.
October would have been a good month for the introduction as it is a relatively quiet period in PAYE terms. We fear that this may mean the deferral for a whole year to coincide with the next quiet window.
Followers of our campaign to remove the retrospective tax liability for an estimated 420,000 pensioners may now start to share our worry that this setback will also impact upon the promised early arrears notification programme to the relevant pensioners. If so, we will have to consider asking for the tax for the current tax year to be waived as well (the liability for 2007-08 has already been waived).
We will update the position when we hear further.
Contact Name: John Andrews (Tel: 0844 579 6700 Fax 0844 579 6701)