HMRC announces red tape reduction for companies

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Following Gordon Brown's 'red-tape-busting' promises in his speech to the CBI conference on Monday, HM Revenue & Customs has announced details of the bureaucracy-reducing measures he alluded to.

These include the launch of a consultation on aligning the filing of company tax returns to HMRC and accounts to Companies House, so that businesses only have to provide the information once. 'We are currently exploring the possibility of a single process for filing company accounts for both HMRC and Companies House purposes and what further improvements might be achievable,' says HMRC. 'As a first step we are consulting on the alignment of filing dates for accounts and returns and, to give businesses certainty sooner, on aligning the enquiry date with the filing date.' Joining up filing of accounts...

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07th Dec 2005 16:35

What we've been dreaming of? Or nightmare?
Am I the only person who sees the proposed alignment of companies’ filing dates for Companies House and corporation tax returns as being a potential nightmare for a very large number of companies?

In my experience, lots of companies file their accounts at Companies House at the last minute, mainly because they need all the available time to prepare accounts and obtain their auditors’ “approval” to them. As the profit before tax is often in a state of flux until just before the board meeting (due to management and auditor late adjustments), the tax charge is frequently the last number in the accounts to be agreed. Under the proposed regime, the tax return will therefore need to be signed at, or immediately after, this board meeting. Is this feasible in the majority of cases?

Furthermore, as the accounts only have to present a “true and fair” position, the tax computation drafted for accounts purposes need not be “correct and complete”, as it does for tax return purposes. The “accounts” tax comp is normally subjected to a detailed review during the tax return finalisation process (after the accounts are signed and delivered). This is so that all the items and issues that would not materially affect the tax charge in the accounts are properly considered and/or disclosed in the tax return.

Under the joint HMRC/Companies House preferred proposal, many private companies would allow themselves no time at all for this “finalisation” process, whilst plcs would only have one month from the accounts filing date. Is this really an improvement on the current system?

The proposed 12 month enquiry window from the actual date of filing (rather than the statutory filing date) is, of course, to be welcomed wholeheartedly and should be extended (as others have written) to ITSA as well as CTSA.

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05th Dec 2005 15:02

...I agree with...
..David's comments. I think others who feel the same should all encourage their professional bodies to make more and stronger representations on this.
HMRC have in the past responded, when the issue is raised at Working Together groups, that the profession and accountants have NOT pushed very strongly on this as an issue, and indeed when pressed as to is it really useful, and/or will it likely lead to changed behaviour, that the profession had again been lukewarm on the point.

We seem to have raised enough of a stink about Form 42 to have got at least some action (yes, I agree it is absolutely galling to hear that by scrapping part of the fiasco, HMG wishes to take credit for "saving" SMEs money, but that seems to be politics these days - or was it always?)

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05th Dec 2005 15:24

All very well ...
I'm all in favour of any form of red tape reduction. However, these announcements were quickly folowed by one stating that Employers will now only be allowed to reclaim input VAT on employees mileage claims where those employees can submit a valid VAT receipt. Surely this is more red tape?

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01st Dec 2005 11:18

Enquiry window
Part of the consultation on aligning filing dates includes aligning the enquiry window with the actual filing date. HMRC appear to have at last accepted that filing early gives a longer enquiry window (whether that increases the risk of selection for enquiry is a moot point, but it is a view that is widely held by the taxpayer).

Surely the same rationale must apply to ITSA. Indeed, I would suggest the problem is much more noticeable here - most personal taxpayers feel a lot closer to their own return than directors are to the company return (I have yet to come across a director who has asked me to delay submission of return but have had numerous requests from individuals).

It should be no more difficult to change the ITSA legislation than it is for CTSA and anything that would encourage early filing would be welcomed by me.

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07th Dec 2005 00:36

...whose red tape, though.
Tracy, see my posting on the VAT fuel specific thread.
HMRC are to be congratulated, not castigated, for their action in dealing with the reclaim of VAT on fuel situation.
They have done an excellent job in applying common sense to get around a classic lawyers's (all focus and no picture) EU ruling.
Not ideal, but best of a bad job - castigate EU, not Treasury for this one.

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