1st Contact has always been committed to working with smaller local businesses. We have the experience and expertise to offer tailored solutions to your accounting needs on a day to day basis.  

Whilst the media constantly reports on the economic instability currently affecting this country, little attention is paid to the effect that current events have on small business. We are addressing this by running a series of news items which will reflect what is going on in the world as it relates to your business.  

If you have any dealings with PAYE, you want any tax queries resolved as quickly as possible. However, there is a backlog of over 16 million PAYE tax accounts which HMRC is having to process manually. This is because a new centralised PAYE system is not ready to be rolled out yet. The delay was announced last July and is due to the system having insufficient capacity to deal with people who have more than one job, or those who regularly change jobs. This is because the current system is built to focus on employers rather than employees. The system is due to be implemented during Spring 2009.  

The new system is due to replace an outdated system from the 1980s and is part of an HMRC project known as Modernising PAYE Processes for Customers with the system itself to be known as the National Insurance Recording System 2 or NIRS2. The project has been beset by problems and delays since its inception and has been postponed on two previous occasions.  

There were 16.2 million cases requiring manual processing as of March 2008. The HMRC target is 10.5 million. Taxpayers may not even be aware that there is a query on their tax records, so this could lead to an increased number of tax refunds in the future. The backlog is likely to worsen during the process of transferring records to the new system.  

The group of MPs which oversees government spending reported this week that the volume of processing required had been underestimated quite significantly. The findings form part of the "Tax Credits and Income Tax Report" which was published by the Committee of Public Accounts on 24 March. The chairman of the committee, Edward Leigh, is quoted as saying that “A strategy to eliminate this backlog should be established and implemented with all speed”. 

The National Insurance Recording System is one of the largest IT systems in Europe and contains around 14 million lines of code. It will hold the details of over 60 million people.  

1st Contact can help with PAYE assessment advice for your business as well as assisting with personal tax returns, so please don't hesitate to contact us to discuss your PAYE needs further.