GOVERNMENT plans to process pay-as-you-earn taxes through a central HMRC computer would inevitably lead to a crash that would leave some employees unpaid, according to the Institute of Directors.

GOVERNMENT plans to process pay-as-you-earn taxes through a central HMRC computer would inevitably lead to a crash that would leave some employees unpaid, according to the Institute of Directors.

The IoD has welcomed the initiative to reform the system, outlined in the Government document "Improving the operation of PAYE", but expressed concerns over the proposal for gross employee pay to flow through a single central system.

Cambridgeshire businessman Chris Parkhouse, regional chairman of the IoD across the East of England, said: "This document contains a lot of good ideas. But the idea that HMRC should be trusted with the gross pay of employees is not one of them.

"The benefits of that proposal can be obtained by other means. We look forward to working with HMRC to devise proposals that will obtain the benefits, without the wholly unnecessary risk."

A statement from the IoD added: "The suggestion that gross pay might flow to a central computer, which would then pass net pay on to employees, is completely unacceptable. Sooner or later, the system would break down and some people would not get paid. That would be a major embarrassment for HMRC, and a disaster for the employees affected and for their relationship with their employers."

The IoD response to the Government's proposals goes on to agree that the system is in need of reform, to ensure HMRC receives the correct tax more often and reduce the number of extra tax demands needed. It also adds that there is a good case for using real-time information and centralising tax bill calculation, but the red-tape burden on employers should be reduced.

INFORMATION: The full IoD response is available at https://www.iod.com/MainWebSite/Resources/Document/100914paye_iod_response_final.pdf