ICAS General News

Bringing Benefits and Expenses into PAYE is Not Simplification says ICAS

The Government’s proposals on delivering benefits in kind and expenses through the payroll would not simplify the process, according to The Institute of Chartered Accountants of Scotland (ICAS).

Responding to the discussion paper issued by HM Revenue and Customs (HMRC) on 13 December 2007, ICAS believes that such an approach would be unlikely to work without a fundamental review and simplification of the taxation of benefits. ICAS recommends that the following would be essential before the changes envisaged proceeded:

• the introduction of a de- minimis level, below which a benefit is excluded from the process;
• the need to amend the benefits code to allow more flexible benefits and simplify the rules for valuation and quantification; and
• if the system were to change then the changeover should be immediate and apply to all employers.

Derek Allen, Director of Taxation at ICAS said, “It is difficult to imagine how a move towards including benefits and expenses in payroll would reduce the administrative burden on employers. The problems of identifying, quantifying and allocating benefits and expenses would remain, and a requirement to do this earlier than at present to comply with PAYE requirements would impose extra difficulties unless there were fundamental relaxations of the process and dispensations became easier to obtain.”