An all-party group of MP's has warned that the government's plans to reform the welfare system risk being derailed as the IT project to support the Universal Credit system is nearly £100m over budget and could pose massive headaches for businesses attempting to integrate with the system.
The All Party Parliamentary Group of Taxation's (APPGT) report in to the PAYE scheme [pdf] uncovered internal HM Revenue & Customs documents revealing that costs associated with the real-time infrastructure had risen from a budgeted £108m to £201m.
RTI – described by HMRC as “the biggest challenge to PAYE in its history” – is a central part of government plans to improve the operation of its pay-as-you-earn tax system. It is also intended to support the Department of Work and Pension's Universal Credit scheme.
RTI will enable employers to submit payroll data to HMRC via their payroll systems before they pay an employee. It is currently envisaged that firms will migrate to the new system from April 2013.
But the APPGT warned that businesses will struggle to meet that deadline, because on-going uncertainty over how RTI will be implemented is not giving payroll providers enough time to deliver the software updates that would be necessary.
“A number of payroll software providers are unable to provide larger businesses with any certainty in relation to functionality or cost, particularly with bespoke products,” the MPs wrote.
“As a result, businesses are hindered in their preparation for RTI migration and lack clarity over how their software will facilitate the new business processes that underpin RTI.”
The APPGT noted that HMRC disputed its figures for the RTI costs, but had not responded to V3's request for comment at the time of writing.
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