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Consultation on PAYE reform

The consultative document entitled ‘Improving the Operation of Pay As You Earn (PAYE)’ could provoke strong reactions. Some will welcome the proposed ditching of coding notices and simplification of procedures. Others might claim that it could give HMRC a licence to snoop.

The Government clearly sees this as an opportunity to cut the cost of operating tax collection even further. The document shows that PAYE brings in a cool £250 billion each year at a current cost of only £1 billion or 0.4% of income.

This exceptionally well-written document builds tension like a Dickensian novel throwing in new concepts like ‘Real Time Information’ and the ‘Centralised Deductions Option’ long before they are finally explained.

The main building block for this radical new set of proposals is the new National Insurance and PAYE Computer Service. This is an all-singing all-dancing new system that will...

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