The UK’s PAYE system needs a major overhaul to bring it into the modern world, says a new report from the Office of Tax Simplification.
The OTS is calling on the government to create a more joined-up approach between employers, tax agents and HMRC.
Bill Dodwell, OTS tax director said: “HMRC data shows over 70% of small businesses use a tax agent to help them with their tax compliance. However, HMRC does not (as yet) provide tax agents with access to the same information as their clients to enable them to carry out a very wide range of tax transactions for them. This costs everyone time and money.”
He felt that HMRC could do more to leverage the support agents can bring in making the tax system work for millions of taxpayers. He claimed: “Ensuring the valuable role of agents is built in to all new or redesigned systems would go a long way to support small businesses – and support HMRC, too.”
Dodwell pointed to the fact that there are currently around 350,000 duplicate employment records and around 5% of returns are received late. He stressed: “The current system does not handle the fluidity of the modern workplace very well, for example in relation to changes of job mid-month or individuals holding multiple jobs or concurrent employment and self-employment.”
Other recommendations look at simplifying corporate tax reporting in the first period when a company is incorporated and setting a more strategic approach to tax administration and system change.