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OTS urges government to reform PAYE system

The Office of Tax Simplification (OTS) has made a plea for the government to look at reforming the PAYE system to simplify it for accountants and make IT systems more SME-friendly.

The organisation wants that system to undergo a comprehensive revamp aimed at making it more straightforward for accountants to access information about the firms they represent from HMRC. It also wants the government to ensure that future tax-related IT systems are developed in a way that prioritises the small firms that will have to use them.

Small business owners are increasingly expressing frustration at how complicated and time-consuming the existing PAYE system is to deal with, as well as at failures of communication between HMRC and their accountants when problems arise. The recommendations from the OTS are part of a report it has published examining how all kinds of companies – from startups to established firms – deal with tax regulations.

It argues in this report that the system for processing PAYE is currently not fit for the flexible working environment of 2019, which includes contractors working for multiple clients at the same time and switching from one job to another in the middle of a month.

It also found that, although 70% of SMEs employ a tax return accountant, HMRC only allows them limited data access that impedes their ability to do the best job for their clients. The report suggests that providing them with the information they need would allow for quicker completion of PAYE returns with less chance of errors.

Posted by Mark
May 28, 2019

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