Centralised Deductions - what could possibly go wrong

HMRC has shown itself incapable of administering the PAYE system correctly as it tries to sort out the mess of almost six million people paying the wrong amount of income tax, some are now facing demands for repayment whilst others qualify for rebates. Those figures are for the two years 2008-10, there are another 18 million open cases relating to wrongly paid tax predating 2008. So is now the time for HMRC to try and persuade the UK that Centralised Deductions will be the way ahead? Centralised Deductions would mean that instead of employers deducting income tax (and National Insurance) from an employees gross salary and then paying the net amount to the employees, the gross monthly amount would be paid to an HMRC-run tax “calculator”, which would then pass the net salary to the worker. This would mean an end to payslips as employers would no longer be able to tell workers how much tax they had paid each month. Apparently instead of a payslip detailing pay and deductions, workers would only receive a notification of their net pay and would have to ask HMRC if they wanted to find out what deductions had been made.

Some problems:
Will people be happy to give HMRC their bank details bearing in mind their data security record?
Will people trust HMRC to make the right deductions and pass on the right amount each month?
How will errors be corrected, at the moment employees have a relationship of mutual trust and need with their employer?
What about other deductions such as holiday pay, SMP, SSP, student loans?
Bearing in mind recent Government IT project failures, why should we believe that this huge new system would work properly?


For a very short time I worked in a DSS (as it was then) office and was staggered at the sheer laziness of the civil servants 'working' there. It took about 10 people to run three payrolls, something that in the private sector would have been managed by two people at most. Most of the staff worked short days, took long lunches and spent most of their time in the office chatting and eating. I was shocked at the complete lack of work ethic and would say that in that office at least, 40% cuts would have no negative effect on productivity, in fact 60% would be possible.