THE INTRODUCTION OF REAL-TIME PAYE cannot be relied upon as a “panacea” by HM Revenue & Customs, MPs said.
The scheme, which will be rolled out in less than a month, will see PAYE reported on or before the date payment is made, while changes to a person’s circumstances will be made straight away rather than at the end of the financial year. It is hoped that the new way of reporting will be is quicker, easier and more accurate.
But appearing before the Public Accounts Committee, HMRC chief executive Lin Homer heard she should not “rely” on the system, with committee chair Margaret Hodge suggesting as much as a quarter of pilot submissions were incorrect.
Homer, though, said she did not recognise that figure, adding she believed the scheme had achieved more than 90% accuracy processing details of more than four million individuals since April 2012.
“Don’t depend on RTI. I feel that you [Homer] are seeing RTI as a bit of a panacea to deal with a lot of the complexities and difficulties that you’ve got”, Hodge said.
The area HMRC will feel the greatest benefit in will be the reporting of work and hours, said Homer, with “regular and accurate information” on the variable income of taxpayers.
The committee also turned its attention to the use of charities in tax avoidance schemes following the high-profile Cup Trust case which sheltered £46m from the public purse.
Charity Commission chairman William Shawcross and chief executive Sam Younger appeared alongside Homer, with Hodge suggesting as many as 50 charitable organisations could be involved in similar arrangements to that of the Cup Trust, while committee colleague Steven Barclay alleged around £1bn of fraud is carried out in the charitable sector each year.
However, Homer told the committee HMRC had never seen schemes of that nature ultimately bear fruit, adding that all four prosecutions by brought by the department against such schemes – including the Vantis scandal – had been successful.
The committee requested the Charity Commission release its correspondence with the Cup Trust.
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