The introduction of a real-time PAYE reporting system in Ireland risks leaving around 120,000 people with substantial underpayments in its first month of operation, ACCA is warning.
Accountancy Daily says that the system went live at the start of the year and ACCA (Association of Chartered Certified Accountants) says some employees who are paid weekly will find a considerable discrepancy in their wages this week as the new PAYE system beds in.
For those people that have incorrect employment details, the emergency tax rate of 51% will be applied, which ACCA says will come as a big shock for many with their gross pay being cut in half, with the other half being paid in additional income tax.
ACCA has said that this will only be rectified by employees updating their details on their PAYE online account, but warns it may take some weeks for the employer to refund the full amount of overpaid tax. The professional body has also advised employers against providing additional funds to tide employees over as this may see them having to pay penalties for making incorrect returns.
Stephen O’Flaherty, chairman of ACCA Ireland, said: ‘Under the old system, accountants were able to manage the PAYE system to ensure that all employees got paid. Under the new online system they simply cannot do this.
‘The implementation of emergency tax for employees that do not have the correct records will considerably reduce their disposable income, post-Christmas, when households are already very stretched.
‘The best advice for people in this position is to register on myaccount on the Revenue website, if they have not already done so, and update their records as soon as possible as it is incumbent on them and not their employer to do so. Those people that are paid monthly still have time to make sure their salary is correct by updating myaccount before the end of January.’
O’Flaherty cautioned against employers making additional payments to help out employees who may be in difficulties because of a lower than expected pay packet.
‘Revenue has budgeted a collection of an additional €50m (£45m) from PAYE modernisation, so our advice to employers is to ensure they keep their employees up to date but also to im