Taxation - Fears over PAYE data security

Tax experts this week raised serious security concerns over Inland Revenue proposals for the electronic transfer of sensitive employee information.

Draft regulations published last week in the finance bill allowed employers to send PAYE information, such as employee benefits, to the Revenue electronically. This could be done via a floppy disk or by using electronic data interchange.

But Inez Anderson, tax partner at KPMG’s human resources solutions group, said: ‘The Revenue does not appear to have fully addressed the security issues involved.

How will they ensure the data is not tampered with after transmission?’

Anderson claimed the Revenue, which was unavailable for comment, needed to develop a secure electronic signature system to ensure submitted forms were properly signed and dated.

‘The main issue is the public’s perception of how secure it is. People will only use a system they can trust,’ said Chris Phillips, marketing director for JCP, an information security software supplier.

He added that a bank or post office could act as a Trusted Third Party and issue electronic signature software to guarantee the identity of each party during a transaction.