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HMRC published a high level consultation document on 24 October on a potential change to the PAYE system which would enable connected employers to elect to be treated as a single entity for PAYE purposes ("PAYE Pooling"). 

Private sector employers with "some commonality in business and ownership" would be permitted to elect to form a PAYE pool, somewhat like a VAT group.  The employers within the pool would nominate a single representative employer to be responsible for submitting combined PAYE returns and payments and each member of the pool would be held jointly and severally liable for any breaches of the PAYE regulations.

The consultation document invites comments on whether PAYE Pooling would be welcomed by businesses; if so, HMRC proposes to produce a further, more detailed, consultation document dealing with the technical operation of PAYE Pooling and the eligibility criteria.

PAYE Pooling has the potential to enable businesses operating within a group to reduce the administrative burdens of operating multiple PAYE systems.  In most cases, groups will already use a centralised payroll which is likely to deliver many of the practical benefits of the proposal already, but PAYE Pooling will ease the tax administration and compliance as well.

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