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Carter: Where are we?

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12th Oct 2009
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The original Carter report proposed that HMRC lead the way in delivery of online services. Rebecca Benneyworth assesses the progress towards a fully online tax system.

Lord Carter of Coles’ first report, issued as part of the 2006 Budget material proposed some extremely radical changes to bring the benefits of online business to Government. HMRC was expected to lead the charge with the move to online only business, and although other Government departments have also stepped up to the mark, the pressure and main focus for businesses remains with the tax authority. Of course the original proposals to move filing deadlines for income tax returns significantly forward represented a step too far, and Lord Carter reconsidered and amended his recommendations in this respect. That said, Government pronounced itself very satisfied with the Carter report, and adopted Lord Carter’s recommendations wholesale.

So, in respect of the main tax areas, how is progress to the amended timetable published at Budget 2007 progressing? Each topic area is dealt with in a more in-depth article, but here are the highlights.

PAYE

Employers were first to the fray, with online filing made compulsory first for employers with 250 or more employees, and then for those with 50 or more. Small employers are due to join the ranks of mandatory online filing for the current year. Take up has been good with around 72% of small employers already having filed online at least once. 

For in-year filing, large and medium employers came within mandatory online rules from April this year, with a delayed penalty regime giving them time to adjust. Small employers will not need to file in-year notifications online until 2011.

Self Assessment

Self assessment was the major push last year, with the new filing deadline of 31 October for paper returns. This prompted a huge surge in returns filed online, with a 50% increase over the previous year. This is the one area where online filing will not be made mandatory, but HMRC clearly hopes that numbers filing online this year will increase again. The signs are good, and to 4 October there had been a 22% increase as against the same period last year.

VAT

VAT is the next area to join the online revolution, with online VAT returns becoming mandatory for many businesses from April next year. Businesses with turnover of less than £100,000 will not have to file online yet – and Lord Carter asked HMRC to review their participation in online filing at some point before 2012. But the current numbers are a challenge to all. Fixing on the precise number of businesses yet to file online is tricky, but the statistic of only 16.4% of returns filed online so far this year is a measure of how far there is to go.

Corporation tax

This development represents much more of an unknown quantity, as not only will returns have to be filed online, but there will be new technology to embrace too. The corporation tax online proposals included a requirement to move to XBRL, and the possibility of joint filing with Companies House has been confirmed. Some software providers already have a suitable product, and HMRC’s free product suitable for smaller companies will go live later this year, but there is a long way to go for many. At present the number of companies submitting their returns online is rising, with 22% of returns filed so far this year being filed online, but of course this is on the current CT online system, and not the new XBRL requirement. 2011 is the date for the mandatory new system, but many agents are already worried.

Summary

Accountants have expressed concern about the developments with Corporation tax online filing, but for the moment they need to focus on the VAT requirements. Take up so far is very low, and the new rules are only months away. For those facing a very busy January, it may be wise to prime your clients now so that they are ready when you speak to them in February to finalise arrangements or check on their readiness.
 

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By Peter Horsman
12th Oct 2009 12:16

Carter
Adopted Carter's recommendations wholesale. Erm, other than the properly tested bit.

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By User deleted
12th Oct 2009 12:53

HMRC's IT

It would help if if HMRC had robust systems & servers in place, at the moment they are a shambles ... and lets see what new disasters the New PAYE computer system brings!

HMRC just plain lousy in avery respect! Tax does have to be taxing!

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By ringi
12th Oct 2009 13:56

Why some a small LTD need to register on so many systems?

I needed to register for VAT, PAYE, and Cooperation tax (and Companies house). So I had to.

fill in 3 sets of forms for HMRC,and then register 3 times for the on-line system,get 3 sets of access codesprovide my contect email address 3 timescomfirm my email is valid 3 timesetc

 

 WHY?

If there was a single web form to fill in to register for all 3 taxes, including the online setup – I think a lot more small company would choose to use online access.

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