The new PAYE system is set to be an additional financial burden to employers in Ireland and Revenue must cover that cost according to the Association of Chartered Certified Accountants (ACCA).

The new PAYE modernisation system being introduced by Revenue will raise an additional €50m every year – an average of €220 per employer. However, ACCA have highlighted that introducing the new PAYE modernisation will cost more than €220 per employer to implement and that without reimbursing employers for the additional cost, the new system risks being viewed as an additional administrative tax on smaller companies.

The increase in revenue from the new system is expected to be a result of additional tax compliance across the country however 230,000 employers and wage bureaus in Ireland will have implemented the new system and contrary to Revenue assertions it will cost more than €220 per employer to set up the new wages processes using the new system for 2019. They have pointed towards factors such as; training staff on the new system, implementing new procedures and updating company software as reasons why the new process may cause an initial spike in employers’ expenditures.

While this is an indiscernible change for a very large employer, it is a material cost for a micro employer and ACCA have called on Revenue to address this particular issue before the new system is implemented in January by sharing some of the uplift in tax collection to help meet the set–up costs associated with the new technology.   

Commenting Stephen O’Flaherty, Chairman, ACCA Ireland, said, “The UK’s HMRC have implemented a similar system in recent years and encountered problems in doing so.  We expect that implementation in Ireland will have similar teething problems; all of which have the potential to impact productivity and expenditure for small businesses.  Even if the PAYE Modernisation system was to work perfectly in January, the cost to a micro business will be considerable including upskilling of staff, implementation of new software and systems and potentially renegotiating wage payments with staff: for example, moving from weekly to monthly wage payments.”       

“The €50m in additional taxation revenue divided out equally by the number of employers involved, at about €220 per employer, would be a move in some direction to meet the cost of implementation. Revenue are in a position to alleviate some of this burden and should meet that cost.”  

ENDS