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Would PAYE Pooling benefit small businesses?

Accountants [1] may be interested to know that HMRC is considering changing the PAYE system so that employers who are closely connected can be treated as a single entity for the purposes of PAYE. If such a move were implemented, it would reduce both costs and processing time.

HMRC has now issued a consultation document that discusses how PAYE Pooling might operate and requesting feedback from interested parties. The scheme would be optional and organisations would be able to decide whether they wanted to come under a pool reference of several employers.

The new pool reference would cover all employee tax records, and the Revenue would treat the pool of companies as a single entity for PAYE [2]. Moving to a ‘PAYE pool’ would not have any direct affect on an organisation’s employees. They would still retain the same employer and their employment [3] contracts should remain the same.

HMRC has not published its definition of ‘connected employers’ in the context of PAYE Pooling, but a spokesperson for the Revenue said it expects to be able to apply different criteria for public bodies and private businesses. As far as private entities go, HMRC [4] will be seeking some commonality in ownership and business, whilst for public sector bodies it would be looking for those that were grouped together under a particular health authority or local council.

The Revenue has also made it clear that payroll [5] agents would not be eligible to join the new system.

The PAYE Pooling consultation runs until the 15th of December.

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Image: pool 102 [6] by deeuutee

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