There are two reasons, one is that there is an onus on employers to provide what HMRC term “Clean Data”. In my experience employers have operated PAYE exceptionally well and have a track record somewhat better than HMRC in terms of inaccurate or lost data. An example arrived in my office yesterday morning. A new member of staff received two PAYE coding notices on the 2nd May, both dated 19th April. They had different tax codes, one being 500T and the other 310L. Added together these add up to the current personal allowance tax code of 810L. The poor girl has no idea what it means apart from having something to do with her other income, she does a bit of acting work and completes a self-assessment every year. It is perfectly natural for an employee to come to their employer with questions about personal tax affairs. One of the aspects of RTI is the aim of HMRC to “reduce contact” with members of the public at the same time as suggesting employers do not need to discuss tax matters with employees. This is never going to happen as quite understandably, the employee sees the entity that taxes and pays their wages as the entity that can sort out their enquiries. I telephoned HMRC in her presence and was on hold for 20 minutes whereby I had to hang up as I needed to attend a meeting. I will try again tomorrow.
How are HMRC supposed to cope when they move from receiving information about employees earnings annually to weekly? They cannot cope very well now in the midst of their budgets being cut, yet they are expected to deal with an increase in data submission by a factor of 52! This isn’t a post aimed a bashing HMRC, who do an adequate job given the enormity of their task, I am simply conveying to you a genuine concern borne out of years of experience.
The second reason for my concern, and perhaps more worrying for me, is that originally the plan for RTI included a move to something called centralised deductions. This is a scheme whereby employers send the full cost of employment to HMRC and they calculate the net pay and pay it to the employee. This idea was dropped in the face of considerable pan industry opposition however they are continuing to press for the use of the BACS channel as a means of information transfer.
Although the scheme is not going live with the BACS channel, it remains HMRC’s stated aim to eventually move to this information sharing medium, currently pretty much a one way system used to send information to banks. The only reason I can think to tamper with the BACS system is that it would make a future move to centralised deductions quite easy. I am sure most would agree that centralised deductions would fundamentally change the relationship between the government and public, inferring as it would that all money belongs to government first and public second, whereas currently it is the other way around, because let’s face it, the government doesn’t have any money, it’s all our money.