Rachael Singh, Accountancy Age, Friday 30 July 2010 at 10:56:00

HMRC's track record of implementing new technology raises doubts overproposals for a computerised tax account for all employees

A drastic change to HMRC's PAYE system, which will provide real-timeinformation on employees, needs to be sufficiently funded and adequately pilotedif it is to be successful in the coming years said a Baker Tilly tax director.

HMRC opened a consultation on a computerised tax account for every employeewith the aim that the software will be up and running in the lifetime of thecurrent government.

However tax director at Baker Tilly Lesley Fidler warned HMRC there is a "long way to go" before the software can be implemented.

"While it is important that there be aspirational goals for our tax system,HMRC does not have a strong record of implementing IT projects," she said.

She gave the example of recent efforts to merge the previously separatecomputerised National Insurance and PAYE systems, which was plagued by "difficulties".

Fidler added: "Anyone who was involved with the short-lived attempt atpaying tax credits via the payroll will hope that this fresh initiative will befully researched, adequately piloted and sufficiently funded before it goeslive."

Currently both employers and pension providers make tax and nationalinsurance payments for employees to HMRC and report them to the tax office oncea year. Annually reporting those figures can result in under and over paymentsof tax theFinancialTimes reports.

The latest consultation is proposing each employee be given a singlecomputerised tax account which brings together their employment and NI records,giving HMRC real time information of all payments made.

According to the consultation document proposed changes would also remove theneed for employers, or employees, to fill in forms to obtain the right tax code,and could simplify the process when a person changes jobs.

HMRC has already invested in the software to create the accounts.

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