HMRC has confirmed that it is to drop plans to extend PAYE Pooling following a consultation.

The taxman looked at a possible change to the PAYE system to give closely connected employers the option of being treated as a single entity for PAYE purposes, has concluded that no further work will be undertaken to introduce a legislative change during the introduction of PAYE in real time.

As a concession, HMRC will allow employers who currently have an informal agreement to pool their payrolls to continue with those arrangements until further notice. No new applications to pool payrolls will be accepted.

HMRC published a discussion paper on 24 October 2011 to gauge the level of interest among employers for PAYE Pooling and explore the extent to which it could benefit employers in terms of reduced administration time or costs.

At present, HMRC has not published public comments on the discussion paper.

HMRC says it will continue to monitor PAYE Pooling after the introduction of RTI.