Let the IRD collect your pay for you!

September 8th, 2010 at 9:05 am by David Farrar

The Telegraph reports:

The tax authorities are consulting accountants, lawyers and businesses on the plans to reform the pay-as-you-earn (PAYE) system. …

To make PAYE more accurate, Treasury ministers have suggested that employers should provide HMRC with monthly updates on workers’ salary payments and other financial details.Such “real time information” could then be used as the basis of a new “centralised deductions” system that would give HMRC an unprecedented role in workers’ monthly salary payments.

Under the centralised deductions system, employers would pay workers’ monthly salary into a central calculator run by HMRC.

There, income tax deductions would be made automatically and the net salary then passed on to the worker by HMRC.

Body … dead … over.

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28 Responses to “Let the IRD collect your pay for you!”

  1. YesWeDid (1,048 comments) says:

    [deleted by DPF - lucky not to get demerits]

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  2. burt (8,275 comments) says:

    DPF

    Imagine if that idea was on the table in NZ as well ……..

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  3. krazykiwi (9,186 comments) says:

    This is the communist collective farm brought forward into the 21st century: Everything your produce belongs to the state that will, in its benevolence, provide you with essential care and some resources. Just watch our resident, fawning Marxists line up in support of this concept.

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  4. SteveO (76 comments) says:

    It is only anecdotal, I know, but my impression is that collecting the right amount of tax is a real problem in the UK but not in NZ. In my years of living in the UK I would always have a big adjustment at the end of the tax year – sometimes they paid me thousands of pounds, sometimes I had to pay them. It wasn’t easy to budget – and I was on a salary which only changed at annual review time; goodness only knows how anybody on contract or commission coped.

    This is probably a good illustration of the how much saving can be made by simplifing the tax system.

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  5. Murray (8,847 comments) says:

    “We’re here to help!”

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  6. pacman (51 comments) says:

    I think that once you get over the fear of the IRD getting that information (which they get anyway when you file your 345 form each month) then I think it is actucally not that bad an idea. I would rather just pay my employees a rate for the hours that they work and someone else manage the deductions. The employees could then log on and manage changes to their kiwisaver /student loans /benefit deductions /etc without me having to do them after work.

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  7. wikiriwhis business (4,019 comments) says:

    Hmmm

    Govt centralised accountancy

    Won’t accountants be concerned about this?

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  8. peterwn (3,275 comments) says:

    IRD is considering further ‘automation’ of tax processes. If someone merely earns a salary, there is generally no problem. If someone has secondary employment or investment income, then at present a end of year ‘wash-up’ is often needed by filing a IR3. If the investments are limited to NZ listed shares, deposits, funds etc, then the wash-up could occur automatically. As a further refinement, where tax is owing, IRD could provide employers with a special tax code to recover tax owing over a six month period. The fewer IR3 forms filled in the better.

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  9. peterwn (3,275 comments) says:

    There is nothing new in such an idea. Sir Robert Jones was so concerned with the amount of legal fees he had to pay that he suggested that his law firm receive all his rents, etc, then pay him a net ‘salary’. He also suggested they name the office law library after him in recognition of the fee income they received from him.

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  10. James Stephenson (2,191 comments) says:

    SteveO – if it’s not a problem here, why is there such a market for all those “Tax Back” companies with their little stalls in Shopping Malls?

    A typical example of muddled government thinking if you ask me, expecting an organisation honed over centuries to perfect the practice of taking money of people, to efficiently give it back…

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  11. wreck1080 (3,923 comments) says:

    Wow, so they actually want the employer to pay the Tax authorities, who then pay the employee.

    Not good. This means, any time there is a dispute, the Tax people don’t need to argue, they just take the cash regardless of the merits of the tax payers case.

    I guess, this may be related to the recent issues the UK tax authorities have been having with miscalculating peoples taxes.

    You’d expect to see a few heads rolling, this is incredible incompetence.

    Why is it that so many UK based IT projects fail massively (recall Heathrow as one example)?

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  12. nickb (3,687 comments) says:

    often needed by filing a IR3.

    Peter if someones only income is salary and wages and investments, an IR3 is not needed. A Personal Tax Summary may be needed if the investments have been taxed at a rate which is too low, but this can be done all over the phone with them. It’s getting more streamlined these days.

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  13. gazzmaniac (2,307 comments) says:

    It’s bad enough dealing with the government with mundane things. Imagine how it’d be if you had to deal with them every time they fucked up your pay? At least if your employer stuffs it up, you have the option of just not turning up to work the following week. If the tax office does it, it’s a bit harder to do something about.

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  14. nickb (3,687 comments) says:

    well said gazzmaniac, sounds like a recipe for disaster, especially with the U.K’s reputation for buraucracy.

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  15. kaya (1,360 comments) says:

    If they ever try that it will be just one more straw towards breaking the back of societal cohesion. A fucking huge one though, more like a bale. We already have too many non productive parasites in the world regulating the rest of us in some fucked up pretense of actually doing something useful.

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  16. Pete George (23,591 comments) says:

    James Stephenson: why is there such a market for all those “Tax Back” companies with their little stalls in Shopping Malls?

    Good question, because it’s…

    nickb: It’s getting more streamlined these days.

    If you have to do anything at all it’s so simple for income earners, for anyone where it is more complex for them to do it themselves they probably need an accountant.

    Our tax collection system works ok, it just needs simplifying and reducing.

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  17. ben (2,380 comments) says:

    To be implemented in New Zealand before 2020. Treasury is tearing its hair out trying to forecast tax revenues. Since bureaucrats assign zero value to liberty and zero cost to coercion, and this makes their lives easier and enhances very considerably their own power, this is a no-brainer.

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  18. RRM (9,933 comments) says:

    Yeah… nah.

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  19. side show bob (3,660 comments) says:

    Only a matter of time, 666, the mark of the beast and all that stuff………….only a matter of time.

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  20. krazykiwi (9,186 comments) says:

    The solution is a simplified tax system, not a ‘smarter’, more intrusive mechanism for managing the complexities of our tax system.

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  21. Banana Llama (1,043 comments) says:

    Hahahahaha …

    Didn’t get paid this week boys? TAX MANS FAULT!

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  22. peterwn (3,275 comments) says:

    Banana – A lefty Government will soon deal with this – if the employer does not meet payroll, the tax people will still pay the workers then hang the employer out to dry.

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  23. Rex Widerstrom (5,354 comments) says:

    Somewhere in the distance I hear the theme from “Les Miserable”…

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  24. scrubone (3,099 comments) says:

    Not good. This means, any time there is a dispute, the Tax people don’t need to argue, they just take the cash regardless of the merits of the tax payers case.

    You mean they don’t do that already?

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  25. Guy Fawkes (702 comments) says:

    Employer pays the HMRC, and they then decide how much pocket money you get every week or month.

    All this is to pay for the gold plated pensions of all the clip board Directors in all the proliferation of State Organs.

    There is no other game in town, apart from paper shufflers organising the very best pension rights for themselves.

    The Police and such contribute heavily for their own efficient Super Scheme. It is the utter Bastards that do fuck all, apart from regulate

    badly, and interfere. A pox on them all!

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  26. burt (8,275 comments) says:

    What a coincidence…

    Extra tax bills posted

    Thousands of New Zealanders face surprise tax bills this year after a glitch in PAYE calculations.

    The Inland Revenue Department (IRD) has started sending out the bills to workers across the country, saying many employers had failed to properly account for the fact that people had received an extra week’s pay during the last financial year.

    Now what was SteveO saying about it not being a problem in NZ…..

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  27. redqueen (567 comments) says:

    DPF, just think of the potential for the IRD to screw up :) ‘Oh, wait, a system failure has occurred and the entirety of New Zealand won’t be paid this week’. If that doesn’t bring socialism to an end I don’t know what will…oh wait, it’s Britain and they’ll thank the Government politely for not being paid :)

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  28. swan (665 comments) says:

    The problem with your pay going through 2 sets of hands is it will be a lot easier for your employer to fob you off if they havent paid you. They can say oh it is with the IRD they must have stuffed up this time… i.e. cheque is in the mail type stuff

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