An AccountingWEB member who had trouble filing a tax return for a settlor-interested trust has highlighted the need to keep an eye on HMRC's Exclusion list for filing 2007-08 tax returns online. John Stokdyk reports.

The list of 2007-08 exclusions for online filing [1] details situations where taxpayers and agents will not be able to file returns online. If an exclusion in the list applies to your situation, you should indicate that you were unable to file a return online and submit a paper return. For these cases, HMRC will accept an appeal against any penalty for the late submission of a paper return after 31 October on the basis of reasonable excuse.

The settlor-interested trust problem came to light when a member contacted AccountingWEB to try and find a technical explanation for errors on the trust supplementary pages that could result in excess tax being paid.

Boxes 7 to 9 on the Trust pages of the individual return allow amounts to be entered for basic rate, savings rate and dividend rate income. But the return does not provide sufficient analysis to come up with the correct tax repayment for some beneficiaries. During our enquiries, an HMRC source identified the situation as one of the exclusions in the latest listing and brought the new version to our attention.

"A new version of the exclusions list was published in November and it's always worth keeping an eye on the HMRC website for updates," commented tax lecturer and new AccountingWEB.co.uk editor Rebecca Benneyworth.

"If you are struggling with failed returns, it could well be that your case falls into one of the scenarios described on the exclusions list, in which case you should go ahead and file a paper return. Knowing what these are could save you a lot of frustration"