A provision requiring employers to file payroll returns and information over the internet by 2010 or pay an agency to do it for them – with a fixed penalty of up to £3,000 for non-compliance – was bitterly opposed by Tory and Liberal Democrat MPs.
Paymaster general Dawn Primarolo claimed the entitlement to use an accountant or other intermediary to carry out the filing meant the Treasury was complying with an undertaking that ‘those who prefer to use paper to communicate with the tax authorities will continue to be able to do so’.
The Tories forced a vote – in which they were defeated by nine votes to 18 – at the end of an acrimonious debate winding up the committee’s otherwise largely amicable proceedings.
Primarolo’s sole concession was to promise to make provision in regulations for those like the Brethren who have religious objection to using computers.
Shadow chief secretary John Bercow said the ICAEW and other professional bodies believed the future of efficient payroll management lay in an electronic solution, but the timescale proposed was unrealistic, the compulsion could be contrary to the European Convention on Human Rights and problems with current computer systems needed to be resolved first.
Liberal Democrat Treasury spokesman John Burnett said: ‘I do not believe that it is in the interests of the Inland Revenue, let alone the taxpayers, that e-filing should be mandatory; it should be permissive.
‘We all want to encourage electronic communications, but the government is taking to making e-filing mandatory and that is simply not on.’
But Primarolo said: ‘It is staggering that in this day and age, with the speed of developments in e-commerce, committee members would declare that they do not wish to assist employers to move to electronic filing or provide the investment necessary to achieve that.’
She added: ‘Electronic filing of PAYE for the overwhelming majority of people by 2010 is not an unrealistic target. It would be unacceptable not to use the best technology in this modern age to improve delivery of service.’
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