tax return deadlines set to change

Part of the Budget heard in March 2006 included a Review by Lord Carter relating to Online Filing and deadlines for submission of VAT Returns and Self Assessment Tax Returns. The key recommendations made in the review include:

• requiring businesses to file their VAT returns, company tax returns and PAYE in-year forms online in phases from April 2008
• introducing new filing deadlines for Self Assessment Tax Returns of 30 September for paper submissions, and 30 November for online returns, from 2008
• promoting online filing, by withdrawing computer-generated paper 'substitute' self assessment returns from 2007/08
• removing perceived barriers to the early filing of self assessment and company tax returns, by linking the period HMRC has to query a return to the date it is filed.

The new online filing requirements for VAT, Corporation Tax and PAYE are expected to apply first to large and medium sized VAT traders and employers. New VAT traders will also be required to file their VAT returns online from the outset.

From 2010, companies, most small VAT traders, and all small employers will be required to file online. The smallest self-employed businesses will not be required to comply until at least 2012. HMRC says that it will implement the measures when the appropriate IT systems are in place and have been fully tested, and that it will consult with businesses, taxpayers, agents, software developers and other stakeholders on the implementation. Paymaster General, Dawn Primarolo, said, 'We welcome Lord Carter's report and its important recommendations on the way HMRC does business online in the future. An expansion in electronic delivery of tax returns will benefit businesses and taxpayers with savings of £175 million a year through streamlining the filing process'.

Currently, a number of professional organisations have joined together to request that the government goes no further with this review until a full consultation process has taken place. Whilst The Paymaster General believes that these changes will benefit businesses and taxpayers, this is most probably not going to be the case. Currently, many taxpayers are not represented by professional firms and this could affect their ability to file forms online. Not everyone has a computer and internet access!

There has also been a large amount of discussion on the affect these changes would have on professional firms themselves. Currently, the deadline for submission of Self Assessment Tax Returns is 31st January, following the end of a particular tax year. This gives firms such as ours over nine months to complete the Tax Returns for all their clients. Under the new review, that would shorten to five months for a number of Tax Return Cases! (It is not currently possible to file online for all types of taxpayer).

In general terms, it can even be seen to be shorter, e.g. For an employee who must file a Self Assessment Tax Return, the Company P11D may not even be received by their employer until 6th July. This allows just over two months to file!

We shall endeavour to keep you up to date on these reviews, however, feel free to contact us if you have any particular queries.