This article considers future e-filing changes in the UK tax system with a guess at the shape of things to come.
At present if you have the time to break down the door of the ‘IT barrier’ then you can voluntarily file most returns online – PAYE, VAT, corporation tax and personal tax Self Assessment – but not everyone has the time or inclination. If you suffer from IT-phobia then the list of enforced e-filing changes in the coming years will not be welcome news.
Changes in 2009/10
Employers with fewer than 50 employees will have to e-file their 2009/10 ‘end of year’ PAYE Forms P14 and P35 by 19 May 2010.
After 2009/10 all employers will have to e-file PAYE ‘in year’ and ‘end of year’ returns but the anomaly will remain that there is no incentive or obligation to e-file Forms P9(D) and P11D.
Changes after 2009/10
VAT filing and electronic payment
- Businesses with a turnover of more than £100k will have to e-file their VAT returns for accounting periods beginning on or after 1 April 2010.
- On or after 1 April 2010 every new business registering for VAT will have to e-file their VAT returns, regardless of the level of turnover.
- The above category of businesses will have to make electronic VAT payments from 1 April 2010.
This does leave me surprised that the Revenue has left one category of employer not e-filing – the existing business with a turnover below £100k but above the VAT registration threshold of £68k (2009/10 figure).
Corporation tax filing and electronic payment
- Every company with an accounting period ending after 31 March 2010 will have to e-file, i.e. the accounts for the year ended 31 March 2010 being the last to escape e-filing.
- All companies will have to make electronic payments from 1 April 2011
One of the significant changes is the fact that every company will have to e-pay. Therefore from April 2011 accountants will no longer be able to forward company cheques and a director or employee in every profitable company in the UK will have to register with the Revenue to e-pay. That could be time and hassle just to settle a £5 bill!
It is a little over ten year since Self Assessment brought greater emphasis on enforcing tax return compliance and as I write the old penalty regime is being ‘modernised’ to uplift the penalties that can be imposed on errors and failings. Add to this the fact that compulsory electronic filing is setting in within the UK tax system and I see one thing left to change – that is shortening the deadlines of compliance. For it is no accident that recently rule changes now ensure that early tax filing does not extend the tax enquiry window.
At present a company has 12 months to file a tax return and individuals have nearly 10 months. My guess is that in time this will be reduced to 9 month for companies (to match the tax payment date) and 8 or 9 months for individuals (i.e. 30 November or 31 December).
The crunch for companies is already happening with Companies House shortening the delivery date for company accounts and given that tax and accounts go hand in hand, it seems perverse to leave the tax date unchanged.
At present the latest date after the tax year for receiving personal tax information is 6 July, when Forms P11D are issued. So here is my guess at what will happen next:
- Electronic Form P11D filing is introduced
- The delivery date for electronically filed Forms P11D will advance to 31 May – being the delivery date for individual’s employment Form P60
- The government will set a deadline of 31 May (say) for Banks to issue interest certificates because at present, banks and deposit takers are under no obligation to issue certificates unless requested.
- The government will offer free HM Revenue & Customs e-file software to the tax return community with ‘easy’ tax affairs.
Three relatively simple steps and by 2014/15 I bet we are there.
This article is for discussion purposes only and does not represent advice on which you should act without consulting a professional as tax legislation is complex and changes frequently.