HMRC Goes Electronic (Gradually)

If, like us, you like to keep a watchful eye on the machinations of HMRC you’ll probably know that for the past few years they have been implementing an ambitious electronic filing system – in other words, a lot of the form filling you do for the tax man now needs to be completed online.

In April 2010 it became mandatory to complete PAYE, VAT and corporation tax returns electronically, and the regulations and penalties relating to late payments have also been tightened. Luckily the inniAccounts system automatically sends you a reminder whenever your tax payments are on the horizon, which should help you avoid these new penalties, but here’s some additional clarification to keep you in the loop with exactly what has changed:

PAYE

Since April 2010, all businesses need to file their end of year forms (P14 and P35) online, and in April 2011 this will be extended to include selected in-year forms (P45, P46, and P46). An increased penalty system for late tax payments has also been enforced, based on a totting-up procedure that takes into account the number of defaults you make during one tax year:

  • Up to three defaults – 1% of total amount of those defaults
  • Four, five or six defaults – 2% of the total
  • Seven to nine defaults – 3% of the total
  • Ten or more defaults – 4% of the total
  • If any tax is unpaid six months after the penalty date, an additional 5% will be levied
  • A further 5% can be levied after 12 months.

VAT

For businesses whose turnover is more than £100,000 VAT returns also now need to be filed electronically, and if you register for VAT on or after 1st April 2010 you’ll need to file online regardless of your turnover.

Corporation Tax

From 31st March 2011, companies will need to send their corporation tax return and supporting documentation in Extensible Business Reporting Language (XBRL). inniAccounts will produce accounts in this format for Premium customers as standard so there’s no need to worry about this one; it’s all included in your service package.

All this online admin can be completed at either Government Gateway or HMRC Online Services, both of which can be accessed from www.hmrc.gov.uk; if you have any queries about how these changes might affect you feel free to drop us a line.