Draft Regulations [1] to require online filing for both Corporation tax and VAT have now been issued, in preparation for the implementation of the next phase of the Carter recommendations. The Regulations are open for comment until 31 July 2009. In summary, the plans are as follows :

• For VAT, returns and payments will be required to be made online from April 2010 for all VAT registered businesses with turnover in excess of £100,000 and for businesses registering for VAT from 1 April 2010. Smaller VAT registered businesses with turnover of less than £100,000 will not be included in the first phase of mandatory VAT online, but will be reviewed in the run up to 2012 when the Carter proposals indicate that all business returns should be made online.
• For Corporation Tax, returns and payment will be required online for all companies for returns delivered on 1 April 2011 or later, relating to periods ending on 1 April 2010 or later. The new rules will not apply to amendments of earlier returns. The returns will have to be made through XBRL, which is not currently widely in use. HMRC will be making an XBRL filing facility available for companies that do not have appropriate software, but this is likely to require a significant amount of re-keying of data prepared in accounts packages to make the submission.

As part of the preparation for implementation, HMRC have also published the results of a detailed survey [2]into the use of accounting software for both online Vat and Corporation Tax. This survey shows interesting results in that businesses interviewed appeared to significantly overstate those already filing online for these two taxes. The current HMRC data is that only 14 per cent of VAT returns are submitted online, while around 30 per cent of respondents to the questionnaire answered that they file online.

Agents who are not VAT registered are currently precluded from registering to file their clients’ VAT returns online, but this problem will be rectified during the next 9 months so that all agents will be able to file online on behalf of clients when the compulsory regime commences. Those agents who do file VAT returns online for clients report significant administrative savings.