Not sure how many people saw this article in the Telegraph last Saturday (20th Feb), but it had the tag line "Biggest shake up of tax payments system since 1940's will help ease admin burden on businesss"

I can't find a free link to the article (sorry) but here is a brief summary..with my own highlighting.

"The Conservative Party is planning to tackle on the the heaviest burdens on business by scapping the existing PAYE system in the most radical shake-up of the UK's tax collecting regime since 1945.
The Tories are working on a pilot for a new automated bank-based system that would remove the responsibility of deducting and paying income tax from employers. The new system could save businessess up to £5.5 billion, they say, as well as increasing revenues to the Exchequer by £1 billion.
Rather than leaving employers to process different tax codes and pay income tax for employees, the new operation would authomatically deduct income tax and National Insurance contributions directly from an employee's gross pay as it is paid into their bank account. The Tories, who are in talks with various technology providers who are developing the system, believe the plans have been made in response to the increasing failures of the current system.
Critics have argued that the current system, which is still paper based, is ill-equiped to cope with individuals who change jobs more frequently and often have multiple sources of income. The Public Accounts Committee said that HMRC has a backlog of 17 million PAYE cases to address and the National Audit Office, last year, estimated that 4.5 million people paid too much tax under PAYE and 1.5 million not enough."

There is a footnote to the paper article...."The Tories say the change will free up revenue officers to collect tax evaders instead."

Not sure i am too worried about the tax evaders bit, but there are a couple of points from the main article that do worry me.

1) How likely is it that this new system will actually get off the ground? Surely this means a radical revamp of payroll systems, potentially doing away with them altogether! Does this not threaten many of us?
2) The "automated collection of PAYE and NI from the money as its paid direct into your bank account" bit scares the willies out of me. How will they know whether an incomming payment is salary, or a dividend/bonus etc? What happens if they get the deduction wrong? How long is it going to take to extract the money back out of HMRC!

Back to the days of cash in hand then or being paid in chickens and potatoes!!

Delboy

I thought I was paid in chickens

Maybe the "increasing revenues to the Exchequer by £1 billion" will be achieved by them not giving a flying wotsit if "an incoming payment is salary, or a dividend/bonus etc?"