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Practical tips on succeeding with FBI

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25th Dec 2005
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We continue our series of articles aimed to help practitioners make a smooth and successful transition from paper tax returns to Filing By Internet.

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Practical Issues

  • Repayments ' for many firms the speed of tax repayments is the single biggest incentive for using FBI. In many cases, repayments are processed within days of the return being submitted electronically.

  • Reducing Revenue errors ' another advantage of using FBI is that it prevents Revenue staff making data input errors. Errors in processing paper returns arise on a significant proportion of cases and adds an unnecessary ' and often unbillable ' burden on firms at the height of the SA filing season.

  • More time - The 30 September deadline has no significance for taxpayers using FBI as tax liabilities are calculated by the software, so no waiting for the Revenue calculation. Additionally, for PAYE taxpayers, provided that their Returns are submitted over the Internet by 30th December, the Revenue will automatically collect any tax owing up to £2,000 for the year to 5th April 2004 through their PAYE coding in the tax year beginning 6th April 2005.

  • Short page returns - You can still use FBI if your client only received one of the new short four-page returns. SA Online will accept the full return in such cases.

  • Enclosures - Some paper is still unavoidable. CIS25 vouchers have to be sent to the local tax office when a return is submitted by FBI. If you want to submit accounts and tax computations with a return you will need to make reference to this in the 'white space' on the return and likewise send them by post.

    Common pitfalls
    The success rate for first time submission of returns by FBI runs at around 80%. Of the failures, around half fail the 'authentication' test ' in other words, there is no 64-8 on the system recognising you as the taxpayer's agent!

    SA software support desks report that a large proportion of calls relate to incorrect passwords and user IDs when logging on to the Government Gateway. This is naturally outside of their control! Firms need to control the issue and use of passwords and IDs, but this really shouldn't be a problem.

    The next most common problems are the use of invalid UTRs and a lack of 64-8 on the Revenue computer system. The SA system runs a checksum algorithm to check if a UTR is valid. Your tax return software should pick up formatting errors in UTRs, for example you may in the past have recorded them in the format 12345 67890 or 12345-67890. For FBI they must be 10 digits with no spaces or other characters. Some software will also run the checksum test, otherwise you'll have to pick up wrong UTRs by trial and error and correct them by reference back to correspondence and statements from the Revenue.

    A lack of 64-8 authorisation will prevent submission by FBI (unlike ELS which accepts almost anything, and from anyone!). There is no way round this, and some larger tax offices are currently insisting that new 64-8s may take weeks to be logged. Firms which send out the full SA return overprinted with the FBI wording and IRmark are at an advantage here ' if FBI fails they can simply send the signed return to the Revenue in the normal way.

    There are an annoyingly large minority of cases where the Revenue has held and used a 64-8 for many years ' issuing agent copies of SA statements, for example ' but it does not appear on the SA Online system. In practice a phone call to the local tax office can often get this remedied straight away.

    Pre-submission validation is essential. Run the validation/error/warnings report (whatever your software supplier calls it) before printing a return and fix all the easy errors in advance. Software houses have access to the full list of Revenue FBI tests, so your in-house validation should be identical to the validation that the return will be submitted to at the Revenue.

    A typical problem that doesn't arise with paper returns is field lengths being exceeded, for example overly long addresses and trade descriptions. In most places, addresses on returns must be a maximum of four lines (3 lines of 28 characters and one line of 18 plus 8 for the postcode). The self-employment business description (box 3.2) must be entered and cannot exceed 28 characters. There are some anomalies ' for example, the taxpayer's name on page one of the return can be up to 56 characters, but in box 24.3 when the return is being signed on their behalf by someone else it cannot exceed 28 characters!

    TIP: Some text boxes are notoriously too small - for example, the CGT pages allow far too little space for the address of land and buildings disposed of. You can get round this by using the larger 'white space' box to give the full address.

    In general, the average practice with average clients will find that FBI works well. If you have a lot of unusual cases, high net worth clients and clients with esoteric sources of income you might find that you suffer more rejections under FBI simply because your returns breach the Revenue's design restrictions for FBI. If this is the case, try to make time to report these problems back to your software supplier as they have an opportunity to give constructive advice to the Revenue's FBI design team. They do really listen!

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    OVER TO YOU
    If you use FBI, post a comment below with your success stories or complaints. What works best? What pitfalls have you discovered that we haven't mentioned? The floor is yours!

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    Self Assessment Resource Centre
    This article is one of a series of aids compiled on AccountingWEB's Self Assessment Resource Centre. For further adivce on Self Assessment and filing by internet (FBI) see also:

  • How to become an FBI agent
  • Selecting FBI software
  • Getting organised for FBI
  • Register for agent's code
  • Tax Return package (PPV tool)
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    Replies (2)

    Please login or register to join the discussion.

    Stephen Quay
    By squay
    05th Oct 2005 11:30

    CIS Vouchers
    Thanks David for that advice. As an FBI advocate submitting CIS25 vouchers by post has always been a pain. I am a rural practice and always post by insured SD which means a round trip of six miles to the nearest village PO. I always though it was a waste of time and money when a self assessment should be just that. Retaining the CIS vouchers in the client file for later proof if required is no hardship. As David says, HMRC have all the details on file anyway. I shall now stop submitting them and monitor what happens.

    Thanks (0)
    avatar
    By User deleted
    13th Oct 2004 17:30

    CIS25 vouchers
    We don't send the CIS25 vouchers to the Revenue.

    Some time last year, before we started FBI, we had a batch of vouchers returned with a covering letter from the local office to say that they didn't need them. Since then we've simply retained the vouchers on file in case they are called for - we don't give them back to the client as we would for other receipts. We've never had a repayment held up.

    This of course made life very easy when we started FBI in November last year. In fact, I was mildly surprised when the 2004 returns still said that the vouchers had to be sent in, but thought that it was perhaps a requirement for taxpayers who filed their own forms.

    If you think about it, the Revenue should already have full details of the tax deductions, provided that the contractors have filed their copy of the forms (!) and the Revenue processing centre has dealt with them promptly (!) and accurately (!)

    Thanks (0)