HMRC have launched a new consultation that could result in major changes on the horizon for PAYE umbrella companies such as Crystal Umbrella. The PAYE business processes were introduced in 1944 and have not changed in the following 66 years.
The aim of the new consultation is to look at how HMRC could save money and reduce costs. It centres around how they collect information and whether or not it could actually be simpler for real time information to be made available to HMRC from employers. This would also reduce costs for the employers, umbrella companies and limited company contractors.
Real time information should actually benefit our contractors as well. There are issues at present regarding people having paid the incorrect amount of tax. Real time tnformation should prevent these mistakes from occurring, particularly when people are changing jobs. In fact P45/46 could effectively become obsolete in the process. The end of year PAYE reconciliation process could also be simplified for everybody: taxpayers, employers, umbrella companies and HMRC.
PAYE provides extensive revenue for HMRC. In the previous tax year £249 billion was brought in through tax and NICs alone.
The current consultation stage will run until the end of the year. Depending on the outcome, the consultation may progress to a second stage in the following months. As one of the country’s leading umbrella companies, we will continue to monitor the consultation process to ensure our business is fully equipped to accommodate any changes to the PAYE system.
Scott Illingworth is Director of Service Delivery at Crystal Umbrella.
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