News Article - The online revolution

If you are in business, do you know how the new rules regarding online filing of PAYE, VAT and Corporation Tax returns will affect you?

These changes represent the latest stage in the shift from paper to electronic tax returns. When A C Mole & Sons filed the UK’s first ever electronic Self Assessment tax return back in 1997 many people thought that electronic returns would never replace paper filing. By last year, however, over two thirds of personal tax returns were being filed online. This electronic revolution is now about to hit business tax returns.

Many businesses already file their PAYE end of year returns online, but from 6 April 2010 this will become compulsory for most employers and from 6 April 2011 most employers will also be required to file their in year “starter” and “leaver” forms electronically.

From 1 April 2010, all new businesses registering for VAT and all existing VAT registered businesses with sales in excess of £100,000 will have to file their VAT returns - and pay any VAT due - electronically. Paper returns will no longer be acceptable for these VAT traders and it is likely that all businesses will be required to move to e-filing at some point, potentially as soon as 2012.

From April 2011, limited companies will be required to send HMRC their annual corporation tax returns, tax computations and accounts online using an electronic format known as iXBRL (it stands for inline eXtensible Business Reporting Language). They will also have to pay their corporation tax electronically. Products incorporating iXBRL are only just starting to appear, but over the next few months more will become available; by 2011 it is likely that most major accounting software products will be iXBRL enabled but HMRC will also be offering a free product on its website. Although HMRC would be unlikely to penalise a company that made a genuine attempt to file electronically but failed because of an IT or software failure, paper returns will no longer be accepted in normal circumstances.

If you are unsure about how these proposals will affect you then more information can be obtained from the HMRC website. Most people who move to electronic filing would never go back to paper, but if you find it all too daunting and need some practical help, your accountant will be able to assist you.
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Paul Aplin is a tax partner with A C Mole & Sons and a former chairman of the Institute of Chartered Accountants in England & Wales Tax Faculty. He can be contacted on 01823 624450, email paulaplin@acmole.co.uk. Bridgwater based tax partner Paul Kingdom can be contacted on 01278 446088, email paulkingdom@acmole.co.uk.