Compulsory Online Filing: Self Assessment Tax Returns Next

Edgware, London -- (SBWire) -- 03/14/2011 -- The practicalities of dealing with the UK tax system have changed significantly over the last few years as a result of the move to online filing. Initially sparked from the Cater report, perhaps overdue changes have meant that individuals, businesses and advisers have had to adapt working practices to ensure returns are filed online as and when necessary.

VAT has already changed, with all newly registered businesses now required to file their returns online, plus a large number of established businesses have also been forced to move across to online filing. Corporation Tax also sees the next big change, with the introduction of compulsory iXBRL filing from April 2011. Self Assessment Tax Returns are no doubt next on the HMRC’s hit list.

Moving to online filing has generally been a good thing. The reliance on the post is perhaps now no longer an issue, at least in the eyes of HMRC. Filing returns has become an immediate process, with immediate receipt. There is no doubt a significant saving in man-power at HMRC as well as a result. Finally, those individuals who are entitled to a tax repayment do seem to get it a lot quicker when the return is filed online.

However there are still a number of issues. Firstly is the issue of getting an individual set-up on the self assessment system.

First an individual, or their adviser, needs to complete a form and send it off to HMRC, which predictably has to be sent in the post. Then following a response from HMRC, the individual has their unique tax reference (UTR) given to them, however in order for their agent to act on behalf of them or to submit their own return online, they need to be authorised. This is an online application, but a code or reference number has to be sent out in the post by HMRC, which again usually means another delay. The experience of many advisers is that these two periods together regularly stretch past 6 weeks. Finally once all of this has been dealt with, the actual issue of the tax return can be considered.

Nick Tagg, Director at Wisteria Chartered Accountants explains; ‘the move to online filing is of course viewed as progress, however it seems that HMRC are not moving across all parts of the process. This really doesn’t maximise the benefits available from online filing. Of course there are cost and security issues which are no doubt preventing some of the changes, however considering the significant changes that are going through, it seems inefficient not to maximise the functionality of the system when the chance is there.’

Individuals who utilise the services of a tax adviser or in HMRC parlance an ‘agent’ may not be aware of the issues that exist in relation to online filing. However certainly those that have used the service directly may have seen some of the issues for themselves. These issues are significantly magnified for those agents dealing with HMRC on a regular basis. The lesson from all this; if you are going to complete your tax return online this year, start early!