Firms could be forced to send employees’ pay directly to the Government first so that officials can deduct the right amount of tax before earnings can be banked.
Plans to replace the Pay As You Earn system – where companies calculate and withhold tax themselves – come after HM Revenue and Customs admitted billions of pounds are not being collected. Officials believe a more centralised system could help eradicate the current problem where nearly 10 per cent of cash owed to the Exchequer goes unpaid. But critics say it could lead to further blunders by HMRC, including the threat of massive fraud if a Government database containing bank details was hacked. HMRC initially wants to stop short of collecting employees’ salaries directly and instead take just the details of what they earned. However, if the system proved a success, then firms would also send pay to the Government, who – after deducting taxes – would credit workers’ accounts with the remaining sum. (Daily Mail)
