Treasury U-Turn Adds To Red Tape Burden

by Amanda Banks, Tax-News.com, London

16 May 2008

Accountancy firm PKF is warning that the Chancellor’s announcement of increased tax allowances and changes to the basic rate band will cause more paperwork for employers who are already struggling to deal with changes to the PAYE system.

While welcoming the compensation for lower paid employees, Employment Tax and Rewards Partner Philip Fisher on Wednesday pointed out that:

“With business and public sector payroll teams across the UK racing to meet the impending filing deadlines for year end returns, the last thing they needed was news of more changes in September.”

The tax rates and allowances already announced for 2008/09 were due to be applied for all pay dates from 18th May, 2008.

This up-rating exercise will now have to be repeated in September. HMRC will have to reissue thousands of notices of coding, and reprint the payroll tax tables that all employers use. Payroll software suppliers will also have to issue updates to their customers.

“Although it may seem small compared to the GBP2.7bn tax cost of these concessions, the cost of this duplicated effort to HMRC and employers is another reminder of why the Government should get these things right the first time round," Mr Fisher commented.

“This is tinkering around the edges. Decisive, root and branch reform of payroll taxes is needed to give the simple and progressive regime that the Government claims to want," he concluded.

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