Saturday, September 11, 2010

HMRC getting ready to take control - will it include a 'carbon tax?' - breathing out will cost you - do you have dead peasant's life insurance?


HMRC could take direct control of pay cheques after tax errors

HM Revenue and Customs could take direct control of every worker’s monthly pay cheque under plans to overhaul the error-prone income tax system.
07 Sep 2010

HMRC also has more than 18 million open cases relating to wrongly paid tax pre-dating 2008. Photo: PA

Instead of employers deducting income tax then paying gross salaries to employees, the gross monthly payment would go to an HMRC-run tax “calculator”, which would then pass the net salary to the worker.

The reform would mean the end of traditional monthly payslips, because employers would no longer be able to tell workers how much tax they had paid each month.

The tax authorities are consulting accountants, lawyers and businesses on the plans to reform the pay-as-you-earn (PAYE) system.

The potential shake-up has emerged after HMRC confirmed that inaccurate data means millions of people will be made to pay back underpaid tax, and millions more will get rebates.

PAYE is based on tax codes that estimate each taxpayer’s annual income, but accountants say the system is increasingly failing to reflect the reality of modern work, where people frequently change jobs and benefits.

In the two years from 2008-10, almost six million people paid the wrong amount of income tax, leaving some facing demands for repayment and others qualifying for rebates.

HMRC also has more than 18 million open cases relating to wrongly paid tax predating 2008.

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