HMRC pledges PAYE reform by April 2014

HMRC has pledged to transform the PAYE system through the use of real-time information (RTI) by April 2014, in order to bring service improvements to employers and taxpayers.

The aim is one of three key structural reform priorities set out in HMRC's business plan for 2012-2015 and follows errors in the current system that saw millions either overpaying or underpaying tax.

Work has already begun on implementing the changes and it hopes to have the infrastructure in place by 2012, though delivery may not happen until two years later.

The intention is to develop and publish high-level specifications for software developers, a process due to end this month, consult on detailed proposals to introduce RTI between this month and February next year, develop and launch a test service for software developers between April next year and November 2011 and put in place IT infrastructure for RTI between November 2010 and April 2012.

The other reform priorities are to use a customer-centric approach in delivering services, improving efficiency and flexibility, and to target resources at areas of greatest risk in its revenue generating activities. It will invest £900m in tackling avoidance and evasion, deal with attacks by organised criminals and improve debt collection capacity, in all bringing in £7bn annually in additional revenues.