Hidden away in last month’s budget (1) was a proposal that could be causing some concerns for football club finance directors. Para 2.25 states:
The Pay As You Earn (PAYE) system is a fundamental part of the UK tax system. The Government wishes to explore how it could be improved in order to reduce costs and make the system easier for employers and HMRC to administer. As an initial step, the Government intends to consult with employers and payroll providers on mechanisms that could support more frequent or real time PAYE data.
A detailed discussion document (2), aimed at kicking off the consultation process (which is scheduled to be completed quickly, by 23 September), has just been issued, and Para 4.31 suggests that the use of real time information has the potential for:
enhancing compliance with tax laws by using real time information to assist in tackling late or under payment of the deductions some employers make
Late or under payment of taxes? Football clubs? Surely not!
Another document , Tax consultations announced at Budget (June 2010), downloadable from the HMRC website here, introduces the consultation under the simple heading of PAYE improvement. All this falls short of proposals in Alistair Darling’s budget (3) of March this year, aimed at “Employers that operate Pay As You Earn (PAYE) schemes to account for income tax and National Insurance Contributions (NICs) and have a history of serious non-compliance in terms of paying late or not paying“; these would have included “provisions allowing HMRC to require security in the matters that can be covered in PAYE regulations. It will also set out the new offence of failing to provide security. Similar provisions will be made for NICs through regulations using existing powers.”
The Budget does however say that (Para 2.112) “The Government will now consult on introducing a power for HMRC to require financial security where PAYE & NICs are at serious risk of non payment, rather than legislate in the upcoming Finance Bill as announced at the March 2010 Budget“, so financial security is not necessarily off the agenda
So, because of a timely change in government, football clubs may have had a narrow escape from the prospect of having to up-front security if they already had a bad track record of payments to HMRC (too many to list, but Club round-up might include some possibles). HMRC may well be just a tad disappointed.
Nevertheless, HMRC may well end up with stronger powers to ensure PAYE and NICs are paid on time, a situation which too many football clubs are entirely unfamiliar with. Certainly the days of being able to negotiate late payment of already overdue debts look to be coming to an end.