Osborne flags up PAYE overhaul in HMRC remit

by Calum Fuller

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13 Apr 2012

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George Osborne

THE CHANCELLOR described the introduction of real-time information as "crucial" to the administration of PAYE in a letter to HMRC's Lin Homer.

The letter outlines the remit for HMRC for the coming fiscal year, emphasising five areas the government sees as key to reducing the deficit.

Real-time information (RTI) is a significant change to the PAYE system and will see employers and pension providers inform HMRC of PAYE payments as they are made, instead of at the end of every year.
The measure is seen as imperative to the delivery of universal credit, which he hopes will commence fully in October 2013.

A pilot scheme is currently being carried out, with ten volunteer employers - including HMRC - submitting their first RTI return. Should this prove successful, RTI will also be utilised in the transition to universal credit.

Chief among the remaining targets is improving tax collection, which Osborne hopes will secure an additional £17bn in revenue, of which £4bn will be the result of additional investment.

The department's spending review settlement allocated £917m of efficiency savings, which are to be reinvested over a four-year period to tackle tax avoidance, evasion and criminal attack. That represents real-term savings of 25% by 2014-15; something the chancellor said "recognised the importance of reducing public spending to reduce the deficit".

Other areas for improvement identified by the exchequer were ensuring the tax system is more accessible and easy to understand and engagement in tax policy and policy partnership with the government.

The former concern, in particular will see the introduction of the "One Click" progamme for businesses over the next 12 months, which is designed to make the UK "one of the fastest countries in the world in which to start up a new business".

To achieve this, HMRC are to launch an integrated site, which will allow businesses to view their liabilities and payments, online registration for main business taxes, a streamlined VAT registration tool and an information hub.

Osborne's final priority was the importance of HMRC to shaping tax policy changes and highlighted the department's input in future tax reforms.

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