| The Revenue and Contributions
Agency were given increased responsibilities by
the previous government to tackle evasion of tax
and National Insurance Contributions (NICs). |
| The Inland Revenue's annual
report shows that as a result of action against
non-compliance an additional £3.9 billion was
collected that might otherwise have remained
unpaid. The yield generated by the "Spend to
Save" initiative accounted for £250
million. |
| In 1999/2000 the government is
expecting to generate a total of £30 billion
from corporation tax, £88 billion from income
tax and £56 billion from NICs. By contrast VAT
will bring in only £54 billion, Excise Duties
£36 billion and business rates a mere £16
billion. |
| |
| Departments
now merged |
| In April the Contributions
Agency was merged with the Revenue in a move
intended to enable "the two departments to
combine their efforts on customer service and
compliance". |
|
|
| As a result of this merger,
compliance visits to ensure that firms are
correctly accounting for tax and NICs are likely
to become more frequent. Such visits last year
brought into the tax net an additional £227.8
million. |
| The department links with
Customs & Excise were also extended and again
the official line focuses on how these
departments will now improve their (revenue
generating) service. |
| |
| Continuing
to pay the costs of the PAYE system |
| In the last year for which
figures are available, the cost to employers of
operating PAYE systems was £1,320 million. This
worked out at as little as £5 per employee in
large companies and as much as £489 for the
smaller businesses. For simply adding a new
employee to the payroll the cost is estimated to
be as much as £350. |
| Many small companies are
finding it more cost effective and convenient to
outsource payroll services. Not only is operating
a PAYE system time consuming and expensive, but |
|
|
| the penalties for getting it
wrong, missing filing / issuing deadlines, can be
severe. |
| |
| Self
employed? |
| One area which is particularly
closely scrutinised by PAYE inspection teams is
the classification of employees as "self
employed". There are a number of guidelines
for establishing whether a worker is self
employed or actually an employee. |
| Incorrectly treating someone
as self employed can result in the Revenue
grossing up the amount paid to the worker and
charging the employer for the full amount of tax,
employers' and employee's NICs with limited right
for the employer to recover this from the worker.
This can result in a payment to the Revenue of
more than a pound for every pound paid to the
worker. |
| If you would like to discuss
ways in which you can check that you are
complying with all the rules, or if you wish to
discuss outsourcing the payroll function, do
please call. |
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