26 November 2001
Fairer PAYE
A universal electronic tax return for employees and pensioners was suggested by John Whiting, president of The Chartered Institute of Taxation and a partner with PricewaterhouseCoopers in his Hardman memorial lecture which took place on Wednesday 15 November in the Chartered Accountants' Hall.
A universal electronic tax return for employees and pensioners was suggested by John Whiting, president of The Chartered Institute of Taxation and a partner with PricewaterhouseCoopers in his Hardman memorial lecture which took place on Wednesday 15 November in the Chartered Accountants' Hall.
Fairer PAYE
A universal electronic tax return for employees and pensioners was suggested by John Whiting, president of The Chartered Institute of Taxation and a partner with PricewaterhouseCoopers in his Hardman memorial lecture which took place on Wednesday 15 November in the Chartered Accountants' Hall.
John said that when pay-as-you-earn was first introduced it was designed to cater for male, full-time employees who stayed in the same employment for long periods. It was not well able to cope with current trends where employees move in and out of full-time and part-time work and self employment. This, together with the many other matters that employers now have to deal with, such as the student loan scheme, share schemes, and tax credits, meant that the pay-as-you-earn system was under ever increasing pressure and the burden for employers was becoming unrealistic.
In addition, from the employee's point of view, he was discouraged from taking an interest in his tax affairs, as he was led to believe that under pay-as-you-earn, the correct amount of tax would be deducted. Instead of just sitting back and accepting that the tax is correct, John suggested that the pay-as-you-earn system could be used to provide all employees and pensioners with a part-completed electronic tax return. The employee would then check and complete the return before sending it to the Revenue, where it would be checked.
John commented that for this to work, people would need to be paid electronically, and that payroll information would have to feed through to the electronic tax returns, along with savings and shares data from the taxpayer's bank or building society.
Looking at how the pay-as-you-earn system could be made simpler for employers to operate generally, John suggested that employers could deduct a simple flat rate out of payments, according to whether an individual was a basic or higher rate taxpayer. This would be simple for everybody to understand.
In conclusion, John proposed that an 'oversight body' be put together to watch over the development of the tax system. This 'tax practice committee' could comprise representatives from the related professional bodies, employer and industrial groups, consumers, and even the tax authorities themselves. The new body would oversee the consultation process to ensure that it is done properly, have the power to investigate the cost of benefit of change, and be able to commission investigations into areas of the system.
A universal electronic tax return for employees and pensioners was suggested by John Whiting, president of The Chartered Institute of Taxation and a partner with PricewaterhouseCoopers in his Hardman memorial lecture which took place on Wednesday 15 November in the Chartered Accountants' Hall.
John said that when pay-as-you-earn was first introduced it was designed to cater for male, full-time employees who stayed in the same employment for long periods. It was not well able to cope with current trends where employees move in and out of full-time and part-time work and self employment. This, together with the many other matters that employers now have to deal with, such as the student loan scheme, share schemes, and tax credits, meant that the pay-as-you-earn system was under ever increasing pressure and the burden for employers was becoming unrealistic.
In addition, from the employee's point of view, he was discouraged from taking an interest in his tax affairs, as he was led to believe that under pay-as-you-earn, the correct amount of tax would be deducted. Instead of just sitting back and accepting that the tax is correct, John suggested that the pay-as-you-earn system could be used to provide all employees and pensioners with a part-completed electronic tax return. The employee would then check and complete the return before sending it to the Revenue, where it would be checked.
John commented that for this to work, people would need to be paid electronically, and that payroll information would have to feed through to the electronic tax returns, along with savings and shares data from the taxpayer's bank or building society.
Looking at how the pay-as-you-earn system could be made simpler for employers to operate generally, John suggested that employers could deduct a simple flat rate out of payments, according to whether an individual was a basic or higher rate taxpayer. This would be simple for everybody to understand.
In conclusion, John proposed that an 'oversight body' be put together to watch over the development of the tax system. This 'tax practice committee' could comprise representatives from the related professional bodies, employer and industrial groups, consumers, and even the tax authorities themselves. The new body would oversee the consultation process to ensure that it is done properly, have the power to investigate the cost of benefit of change, and be able to commission investigations into areas of the system.
