HMRC has announced that it will retire the current corporation tax (CT) online filing form and replace it with a basic online tool.
The move has already caused friction with professional representatives who are concerned that the proposed free online tool will no longer be available for agents.
Together with Companies House, HMRC is working on a “new, improved” company tax return and company accounts filing service called Company Accounts and Tax Online (CATO).
“CATO is an online service which companies will access using their own filing credentials, unlike the existing HMRC free filing software, which uses a form downloaded from the internet,” the department said in an email to interested parties.
Generally CT returns are filed on companies’ behalf by advisers who use commercial software, HMRC acknowledged. Currently there is no restriction on who can download and use the existing free software, but agents will not be able to use CATO in this way, the department warned.
The announcement did not sit well with the ICPA, which published a critical comment on AccountingWEB’s Supplier news page: “Just how will that work? What if the company pass their own filing credentials to their accountant?
“Are HMRC really saying that a company’s duly appointed and trusted agent cannot be allowed access? Are they so angry with agents that they are spitefully excluding that small number of small practices that use the free software on behalf of their clients?
“And how are they to monitor or police this? Will there be a fine if a company ask their accountant to help out because they are getting in a mess?” the ICPA said.
The CIOT statement on the matter also spoke of the tax body’s concern that its members would be adversely affected.
HMRC’s announcement acknowledged: “We understand that some agents are concerned about the withdrawal of the free HMRC software and the need in future to use commercial software to file company accounts and company tax returns on behalf of clients.”
To soften the blow, it announced that the current software for accounting periods ending on or before 31 December 2015 will remain available until 31 December 2016. Since returns for accounting periods ending 31 December 2015 will not normally be due until 31 December 2016, “This allows at least a year for those agents who use the HMRC product to make alternative arrangements,” HMRC said.
The UK has a highly competitive tax software industry, the department added. Single-use CT filing programs are available for £25-£50, and unlimited use packages for less than £250. “So an agent with 25 clients would need to add only £10 each to their bills to cover costs,” HMRC said.
Tax software suppliers are hardly likely to object to a surge of new business, but executives expressed mild surprise at the announcement. TaxCalc director Steve Checkley, who chairs the trade body BASDA’s accountants in practice forum has known that HMRC was keen to improve its online CT system, but told AccountingWEB: “It was only until the announcement the other day that we learned that agents would not be able to use it to submit on clients’ behalf.”
He added: “Whilst I don’t wish to put words in the mouths of fellow suppliers, I’m pretty sure we all believe that such products offer a superior experience to HMRC’s that justifies the cost.”