You heard it here first...


A couple of weeks ago I said that we were being softened up for a new assault by HM Revenue & Customs. All the fuss about PAYE mistakes was the perfect excuse for the Revenue to say that the system needed a complete overhaul. It was riddled with errors. It put too much of a strain on hard-pressed employers to collect. How much easier for employers it would be, and how many mistakes and how much tax avoidance we would be spared, if employers simply sent the Revenue your gross pay and they did the rest.

Now in a discussion paper, that is exactly what is proposed. Under a 'Centralised Deductions' system, employers would tell the Revenue what your gross pay is, and pay that gross amount to HMRC – which would then take out your tax, national insurance, student loan payments and suchlike, and then pay what is left into your bank account.

It speaks volumes that our tax authorities are talking about this as if it is the most natural thing on earth. But this idea could only come from a body so out of touch with the rest of us that it says there's no need to apologise after it messes up millions of PAYE payments. I don't believe even the most totalitarian regime in history has ever given itself such centralised financial power.

Just think about the implications of it. Not only did the revenue mess up PAYE and leave millions of people with unexpected tax bills. It also managed to lose 25m of our names and addresses. Let's face it, the Revenue's ability to deduct the right amounts of tax from our gross pay must be in question. And when they deduct too much and are sitting on the cash, how long do you think it will take employers – or you, the employee for that matter – to get it back? Possession is nine points of the law, and in a fight between a citizen and a civil servant, there's no doubt about who is the servant and who is the master.

It's one of those subtle but crucial changes in the relationship between the state and the citizen. At the moment, our earnings are our money, and when we elect a government, we agree to hand over a bit of it for those purposes. Under this scheme, our earnings become the government's money – it has gone into their bank account, after all – and they give us a bit back. We've suddenly lost power over our own finances.

Think also about the bank charges you are going to get when the Revenue deducts some amount you weren't expecting, and leaves you a penny overdrawn. At least with your employer you know when your cheque is coming, and you can see how much you are being paid, and you can complain directly if you think it is the wrong amount. Under the Revenue scheme, you would never even know how much is being deducted.

People always complain about the banks taking days to clear cheques – and no doubt earning interest on your money before it actually gets to you. With the Revenue taking in the gross pay of every employee in the country, that is a huge wall of money that the authorities will be sitting on; and every extra minute they sit on it means more interest earned by them, and less by us.

I like to believe that, when employers and employees realise what this plan could mean for them, their outrage will overwhelm it. Again, it is a mark of how distant and self-obsessed our tax authorities have become – after years of pursuing their Brownian targets rather than serving the public – that they even propose it. Either that, or a mark of what an authoritarian state we are living in, where our opinions aren't going to matter anyway.