CT efiling delay: Another January in October

Accountants making the transition to iXBRL-based electronic filing are coming up against a closed door, as HMRC will not be ready to accept post-31 March 2011 returns until it updates its online portal in October.

As AccountingWEB.co.uk member Kevin Ringer found to his dismay, HMRC reports that because of the reduction of the Corpoartion Tax rate to 26% (21% for small company rate) on 6 April, it needs to update its software and will not do so until October.

“The rate changes only affect returns with accounting periods that end on or after 1 April 2011 with filing dates of 1 April 2012 or later,” the HMRC service availability notice explained. “These changes will take effect on the date that Finance Bill 2011 receives Royal Assent (expected in July 2011). Corporation Tax Online will then be updated in October 2011 with the new rates. In the meantime Corporation Tax online will use the old rates.

“If you can’t wait and have an urgent need to file your return before then, please contact your HMRC office for further advice. HMRC would like to apologise for any inconvenience this may cause.”

Ringer commented: “So after forcing us to file online, HMRC’s systems are now incapable of accepting online Returns. Crazy or what?” Several members made the same point in our HMRC Working Together eGroup.

In response to Ringer, Taxhound wrote: “I am not impressed with the Royal Assent argument.  It is just another indication of the total lack of organisation at HMRC.”

Others were more sanguine. “HMRC are normally late in doing this; it is not a new development. The only problem is that this year we have the whole iXBRL thing,” said Nichola Ross Martin.

Software developers are also concerned about the delays and are having to field support calls from exasperated customers. “Our 2011 CT Solutions are ready for release but we are having to provide a hefty caveat that while they can be used to perform the necessary calculations and arrive at the tax liability, submissions of actual returns are unlikely to be possible before October,” commented Andrew Ross from BTCSoftare.

AccountingWEB Tax Editor Rebecca Benneyworth added her voice to calls for HMRC to do reduce the time-lag.

“It was always clear that when efiling became mandatory the October changeover date was going to cause problems,” she said. “It’s an unacceptable situation that was not properly identified and HMRC needs to find a better way to do it.”

Continued...

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Comments
BKD's picture

The digital era

BKD | | Permalink

On a practical level, I don't condider this to be too much of an issue - for this practice at least. But I share the resentment that haveing forced us into online filing we are, in theory, prevented from doing so for 6 months of the year. In the good (bad?) old days of paper, it didn't really matter that tax rates etc were announced only a few weeks before the start of the new tax year.

But as we rapidly progress to 100% electronic processing, procedures need to be changed to allow all systems (clients, agents and HMRC) to be fully ready by the start of the tax year. How that is achieved, I'm not sure - bring the Budget forward to pre-Christmas, change the financial year dates? But it cannot continue like this.

The Naked Accountant's picture

Nil tax payable

The Naked Accountant | | Permalink

I am wanting to file a 30 April 2011 CT600 as the client wants to strike off the company ASAP.  Even though the company is loss making, so no tax is payable, I still can't submit the return because of a change in the tax rates!

daveforbes's picture

@naked

daveforbes | | Permalink

Should not stop you you if there is nil tax - I just sent a test transmission. What software are you using ?

David Forbes

www.forbes.co.uk

p.s. @everybody, postponing filing you return by 6 months due to delays at HMRC - does this have any effect on the investigation window ?

Locutus's picture

This seems to explain the problem I had

Locutus | | Permalink

I have tried to file two CT600s with 30 April 2011 year ends using PTP.  One had no tax liability and went through OK.  The other did have a tax liability and was rejected - the error message said "the rate of tax must equal an applicable tax rate ..." so I guess I won't be able to file that one until October.

I find a couple of things ridiculous in the 21st Century online world that we live in: -

Firstly why can HMRC instruct that retailers put up the cost of alcohol, tobacco and petrol duty from midnight on Budget Day (obviously without receiving Royal Assent), but they can't update their own software for the change in CT, without Royal Assent?

Secondly if Royal Assent occurs in July, why does it take until OCTOBER to update the software?  That's around SEVEN months from the Budget announcement for the techies in HMRC to get their heads around the mammoth problem of how to change the small company rate digits from 21% to 20%.  Surely it's a simple job.  Am I missing something?

It is utterly bizarre that after the introduction of iXBRL it will be many more months for some clients' CT600s to be filed than used to be the case in the "bad old days" of paper.

The Naked Accountant's picture

@daveforbes

The Naked Accountant | | Permalink

I am using TaxCalc and it was rejected when online filing attempted.  Sounds like I need to get onto TaxCalc rather than HMRC.

Flash Gordon's picture

File by paper with a covering letter

Flash Gordon | | Permalink

I've filed a couple by hard copy with a covering letter pointing out that I would have filed online if their systems allowed it but as their systems wouldn't be capable until the autumn....... The one with a liability has been accepted (I can see the liability logged on the system) so I assume the other one with a nil liability also. Am hoping I'll get statements to confirm in due course.

I trust that "writing their MPs" is a typo?

davidross | | Permalink

..... and not a creeping Americanism 

KenKLM's picture

Double standards

KenKLM | | Permalink

I am sure many other agents will share my view that HMRC seem to be getting worse for double standards . They are increasingly applying heavy pressure for filing and paying on time and imposing more and more different types of penalties . Yet typically I cannot get a reply to a letter within 30 days ; cannot get them to deal with EOY PAYE with CIS elements to them with substantial refunds due to clients ; cannot get SA refunds sorted ; and now they think it is acceptable that they update their CT systems in October for a CT rate change ... ridiculous .. becoming not fit for purpose and mired in politics .

richardterhorst's picture

HMRC - Chaos in October?

richardterhorst | | Permalink

He, he,

All accountants to file October and see the collapse of the website and utter chaos in HMRC trying to cope with 6 months work all at once.

Be fun to read the newspapers and the forums.

.

ireallyshouldkn... | | Permalink

Pressure needs to be put on HMRC to sort this out and not hide behind daft statements about Royal Ascent.

If SAGE can put enough pressure on the institutes to put together a plea for a delay in the implementation due to their own internal software failings, surely they can deal with this far more important issue that affects far more practices?

This is a serious issue - to have gone through the pain and cost of iXBRL - entirely for the benefit of HMRC - can we at least not have the ability to file on-line, rather than have to either waste time posting them, or waste time create a new 'stacking' system for returns between now and October, and explain all this to our clients?

This situation is simply not on.

 

Cash flow

EGo | | Permalink

So why is it going to affect cash flow? HMRC have already said returns with losses carried back can still be made if there is no post 1/4/11 liability.

 

Old Greying Accountant's picture

Investigation window

Old Greying Acc... | | Permalink

"p.s. @everybody, postponing filing you return by 6 months due to delays at HMRC - does this have any effect on the investigation window ? Posted by daveforbes on Sat, 11/06/2011 - 11:09 "

Yes it does.

In my view, as this is HMRC's delay, the window should start one week after the signing date of the CT600 by the client, the fact HMRC may not get it until 6 months later is their fault, not the clients'. Indeed, if I have a client that HMRC attempt to start an investigation over 12 months after signing by my client I may well take this point further. I would also be tempted to send a paper copy by recorded delivery.

HMRC say this

If your company does have a tax liability you’ll need to wait until our online services are updated in October to file with the new rates. If you can’t wait and have an urgent need to file your return before then, please contact your HMRC office for further advice."

Has anyone actually called, what do they say? 

elansea's picture

It never was a level playing field

elansea | | Permalink

I have been filing post 31/3/11 CT600s by land mail and attaching a copy of my Taxcalc notification explaining that HMRC won't get their act together.

I suggest that the more of us who do this, the more it might concentrate their minds on getting the job done in time.

It's a shame that HMRC don't have to reward us with a fine for preventing e filing!"

 

M

One rule for them, another for us

fishfishyfishfish | | Permalink

This is a wholly unacceptable situation.

I fully agree with the suggestion that HMRC should simply accept paper versions of CT600s that its systems cannot yet accept via iXBRL.

As a profession we were expected to be iXBRL-ready in time; we should expect nothing less of HMRC.

The suggestion that this is perhaps a bit of a 'non-issue' is arguable. Some contributors have already made the point that clients' enquiry windows may be extended as a result of filing delays. I have no doubt that the delays will also cause an administrative headache for many (I suspect most of us have had enough iXBRL headaches already, thank you very much).

Not a new problem but now more of a problem!

Paulsoper | | Permalink

The problem has been around ever since HMRC started to go online - the online CT calculator cannot be updated until after royal assent so anyone using that to calculate liability back in the paper return days had the same problem.  What makes it worse is the enquiry window point raised above, as the window being set at 12 months from submission of the return was an incentive to file early!

Solution?  The dorks at the Treasury need to add Corporation Tax rates to the budget resolutions when they will be given immediate effect by the Provisional Collection of Taxes Act 1968 - although the headings in the act refer only to income tax, purchase tax and customs and excise duties (!) the text of the legislation is what counts and it can apply to CT by s1(1).  Then HMRC can give early effect to the change.  If not from 1 April I'd have thought 1 May or June, and again if the programmers haven't programmed their systems to add changes in CT rate by altering a single field they need to be taken out and shot.

Locutus's picture

Yes, not a new problem

Locutus | | Permalink

I seem to remember a few years back coming across the same problem, with the "systems will be updated in October" excuse.  So in those days I just popped the CT600 and accounts in the post.  Job done.

Now I have no idea whether HMRC will just send back the paper CT600 and accounts with a standard letter advising that they must be filed by iXBRL. 

I'm tempted to submit my firm's 30 April 2011 accounts and CT600 on paper by recorded delivery with a covering letter explaining the situation and see what happens, although I'm not confident that I will get a sensible response.  As far as I'm concerned I would have delivered a return by the only means available, so the enquiry window runs from the date they receive the paper CT600.  Woe betide them if they try to launch an enquiry outside of the window from which I have filed the paper return!

Had anyone called, what do they say?

jonbryce | | Permalink

"Thank you for waiting.  Your call is important to us.  Please hold the line and an adviser will be with you shortly"

CT Online

liza miles | | Permalink

Not only are there problems with filing via iXBRL. I'm using the HMRC templates to file clients returns and the Merthyr Tydfil office have admitted that this system will not allow for certain deductions to be included in the CT calculation ie PAYE online filing incentives.  They know there's an issue and are 'waiting for a patch' for their software.  It took me hours on the phone to the CT helpline, PAYE helpline, then CT office to glean this though.  Again, if they know the software isn't up to it, why do they insist on making us use it!  I even had one CT officer tell me to 'fudge' the return, and add in an extra expense to cancel out the incentive.  'What about the double entry' I shouted!!

.......

Ian McTernan CTA | | Permalink

@ liza, the additional entry to be made is 'additional accountancy fees incurred/time spent dealing with HMRC incompetence'.

This is all yet another example of the lack of clear management at the top of HMRC which leads to yet more pressure on the poor suffering staff who have to deal with the flak.

It's typical of the type of 'leadership' that imbedded itself in the public sector under the previous Government- make no decisions, employ lots of staff to monitor everything and achieve nothing, and ensure everything goes to nmerous committees so that if something goes wrong no one is to blame- and never ever think of the ballooning costs of the above.

Now we have the problem of clients wanting their returns filed when they are completed being told 'wait until October and we can file it then' when all they want is to know it's all been done and dusted and they can see their liability on the system.  Not to mention I now have to make more entries in my diary to remind myself which ones to file in October.

It's pretty pathetic that we can be forced to be ready to use ixbrl even after everyone objected to it, yet HMRC cannot even change a few figures in the software and be ready on time.  If this was a private company the upper management would all be sacked and replaced with people who can actually do their job and gets things done.

daveforbes's picture

A bit sad really.

daveforbes | | Permalink

I appreciate it might take the HMRC 6 months to re-write the validation rule that checks the contents of boxes 40-55 on the tax return (even if a normal programmer could do it in a day), but surely the pragmatic approach would have been just to disable those validations for a few months.

If you removed the validation, OK some might send in returns with the tax rate set at 10% and get them accepted, but you could then re-run the validations retrospectively and apprehend any miscreants.

I have always thought some of the validation rules are bizarrly pedantic. My favourite is the one for phone numbers on the SA800. The form has boxes both  your phone (box 9.1) and your advisers phone number (box 9.2). You used to be able to fill in both. Then some bright spark spotted that text says "fill in your phone number OR if you prefer you adviser's phone" - and implemented a validation rule to reject the return if both are filled in.

Marvellous work.

David Forbes

www.forbes.co.uk

You can pay the tax now though...

Rob Cole | | Permalink

jonbryce wrote:

"Thank you for waiting.  Your call is important to us.  Please hold the line and an adviser will be with you shortly"

And when you do get through, they couldn't give a monkeys - you wait until October and that's that.

Oh, but you can send in any payments of corporation tax now if you want... I think not.