In 2006, a government report recommended Online filing for businesses and IT-literate individuals by 2012. Over recent years, HMRC have embarked on an ambitious programme of creating online filing facilities. HMRC will be changing the way businesses have to pay a number of taxes and, in addition, certain forms and returns will have to be filed online.
The taxes that are moving to compulsory online filing in the near future are:
- in-year and end-of-year PAYE forms for employers;
- VAT; and
- corporation tax
Set out below is a brief overview of the forthcoming changes and where appropriate the action you will need to take, or we will take on your behalf, in order to be ready and able to comply with the new requirements.
Employers with 50 employees or more already have to file their end of year forms (P14 and P35) online. From April 2009, they also have to file in-year forms (P45, P46 and the new P46 (Pen)) online too. Although the filing of these in year forms is compulsory, HMRC have agreed not to charge penalties until January 2010.
Employers with less than 50 employees must file end of year forms online by April 2010 at the latest and file in-year forms online from April 2011 onwards.
It is important to ensure that your software has the relevant capabilities to file online and that relevant staff are aware of the requirements. It is also possible to file year end and in year forms via HMRC online services.
If you would like help and advice in this area please do get in touch.
If we deal with your day to day and end of year filing we will ensure that these new requirements are dealt with on your behalf.
PAYE penalties for late payment
Provisions are being introduced to charge a penalty where tax is paid late. For PAYE and CIS payments, the liability to a penalty will be based on a totting up procedure depending on the number of defaults during a tax year. A penalty will not be levied for the first default and will then rise as follows:
- 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; and
- ten or more defaults - 4% of the total.
If any tax is unpaid six months after the penalty date, then a penalty of 5% will be levied and a further 5% can be levied after 12 months. HMRC are to implement the PAYE late payment penalties with effect from 6 April 2010.
It is important that your business makes its payments on time. If you are having difficulties paying these liabilities please do get in touch as soon as possible.
The main change to corporation tax will be that, for returns due after 31 March 2011, companies will need to send their tax return and supporting documentation in Extensible Business Reporting Language (XBRL). We will ensure that your accounts are produced in the correct format prior to the change.
Companies House has also announced that it will accept company accounts in XBRL, the same format in which all company tax returns must be submitted online to HMRC from April 2011.
What to do now
These new rules may need changes to your business systems. You can find more technical information about the changes and timescales at www.hmrc.gov.uk/online/index.htm
Change is often difficult but we are here to help. Please do get in touch if you would like you discuss any of these changes in more detail.