Delays with an IT systems overhaul at HM Revenue & Customs may hit major benefits reforms being announced today, according to reports.
The government is announcing a welfare overhaul, introducing a universal welfare credit from 2013. The credit will replace existing benefits including JobSeekers’ allowance.
The pay as you earn tax software planned by HMRC is a key system that will provide data to the new welfare software. Serious concerns have been raised that that software is not going to be ready in time, according to a report in The Times newspaper.
The new welfare IT depends on the PAYE system running, but this will not be complete until 2014, the newspaper reported. A consultation on the PAYE changes is currently taking place, and the contract for the IT work on the system has not yet gone to tender.
The PAYE system will run real time calculations of tax, rather than running tax calculations annually. The Department for Work and Pensions will only be able to accurately assess benefits by seeing people’s current income.
A spokesman at HMRC told The Times that the new software was far from being ready. The government is thought to be considering an alternative, reports stated.
There are also concerns over whether HMRC will be able to handle the amount of data created by a real time system. The Freelancer & Contractor Services Association last month warned of the potentially “huge amounts of additional information” that HMRC would need to be able to process. It also questioned data security, which HMRC has promised to take the right steps for in any new system.