A TREASURY SUB-COMMITTEE session on the administration and effectiveness of HM Revenue & Customs flagged up "enormous problems" with the real-time information programme for PAYE.
Due to commence from April next year, RTI will see employers updating their PAYE records as and when changes occur, rather than at the end of every tax year.
However, despite HMRC claims that the pilot scheme currently underway is proving successful, witnesses called before the committee warned the initiative could experience significant problems, particularly with small businesses making monthly payments.
In its current guise, RTI would require income tax deductions and national insurance contributions to be paid "on or before" the pay day. But ICAEW tax faculty chairman Paul Aplin told MPs enforcing that rule as "absurd", while Robin Williamson of the Low Incomes Tax Reform Group predicted "enormous problems" for small companies making online submissions.
He added that there is "a mismatch" between what is expected of taxpayers and the help and guidance they are given by HMRC.
The morale of staff at the department was also discussed, with Peter Lockhart of PCS Revenue & Customs Group calling for "proper investment" in HMRC after he and his co-witnesses had described the decision to reduce staff while expecting higher tax yields as "absolutely illogical".
"There's a logic there ... the more that's invested in HMRC, the more you get back", he said.
Concern was raised that 4,000 temporary staff are currently working at the department, to "plug the gap" left by "natural wastage" such as retirement and staff taking other jobs.
However, president of the Association of Revenue & Customs Gareth Hills noted that recruitment had not been impeded by poor morale or the "corrosive" effect of negative media coverage, having taken on more than 200 graduates over the last year.
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