Taxman in £20m payout delay

The taxman has admitted it could take until December to send cheques to
thousands of small businesses that are due a £150 reward for filing their annual
PAYE return online. Around 130,000 businesses are awaiting a cheque.

The incentive scheme was introduced in 2004/05 to encourage business with
fewer than 50 employees to file PAYE online, which is compulsory from 2010. HMRC
has previously been criticised for taking too long to make payments to
businesses.

A spokesman for HMRC said it had improved its payment system but the number
of payments had leaped.

The majority of businesses choose to be paid by ‘self-serve’, which is a
deduction straight from their PAYE payment. ‘Despite the current temporary
delays, most cheques will still be issued more quickly than they were last year
and most employers will receive their payments before December,’ the spokesman
added.

‘Over 50,000 employers have received 2006/07 incentive payments, which is
significantly more than at this time last year.’

Smith & Williamson national tax director Richard Mannion said HMRC had
failed to provide customer service to small businesses.

Grant Thornton senior tax partner Mike Warburton warned that larger
businesses, which will have to file PAYE online in 2009, could face problems
with HMRC’s systems, following continued issues with its management of the
incentive payment scheme.

‘Problems with smaller companies’ returns raise questions about whether HMRC
is going to be able to cope,’ Warburton said.