The All-Party Parliamentary Taxation Group (APPTG) has slammed HMRC's delivery of real-time information (RTI) for the much-anticipated, modernised PAYE system, claiming that the speed at which it is being implemented "threatens every business and benefit claimant in the UK".

This is despite HMRC recently announcing that more than 1,300 employers will now join the PAYE RTI pilot by the end of September.

The RTI system will automatically update employee tax records, to ensure that workers pay the right tax and/or receive the correct benefits. RTI is expected to go fully live for all employers in time for the October 2013 introduction of the government's new Universal Credit System, which covers benefits.

Entitled 'PAYE at the crossroads', the APPTG report branded the current PAYE system, which was introduced in 1944, as problematic because it delivers inaccurate calculations for millions of taxpayers and creates an administrative burden for both businesses and HMRC.

The APPTG therefore supports the concept of RTI, but was concerned that HMRC had "overstated its business case".

Under the reformed PAYE system, the RTI function will enable employers to submit payroll data to HMRC via their payroll software at-or-before the point they pay an employee. It will be used to facilitate the introduction of Universal Credit in October 2013 with the earnings information it requires to calculate benefits.

However, the APPTG claimed in its report that HMRC had underestimated the cost required for RTI investment, the employer migration cost, and that there has been no estimation of employer software costs nor of software development costs.

APPTG's primary concern is that HMRC is currently trialling RTI through what it calls its 'Interim Solution', which is only able to check, not guarantee, that employers submit information at-or-before the point they pay an employee.

Whereas the originally planned 'Strategic Solution' method would have guaranteed real-time accurate information by attaching the payroll data to a payment instruction.

The group's report claims that using the Interim Solution could affect the accuracy of Universal Credit, and even though HMRC is committed to delivering RTI through the Strategic Solution after April 2016, it is "concerned that in practice there is little evidence to suggest this will occur".

APPTG suggested that the government, consequently, has two viable solutions. It can either choose to implement the Strategic Solution, which will guarantee the flow of real-time data to HMRC by using the payments infrastructure, or it can scale back to RTI-light.

RTI-light would consist of periodic or monthly filing, as occurs in other OECD countries, and as a result removes the complications associated with the 'at-or-before' principles. However, the report warns that this option would mean that "Universal Credit ceases to be dynamic".

Finally, APPTG suggests that a single government department, in this case HMRC, should not be expected to consider the full cross-governmental implications of RTI and PAYE. As such, it recommended that the Cabinet Office establishes a working group, endorsed by HMRC, to "fully explore the importance of the PAYE system and PAYE data across government".

A National Audit Office report also recently slammed HMRC and its implementation of RTI, claiming that it 'needs to get a grip' before introducing the system.