Online, Offline – What’s Going On?

After imposing new rules requiring tax returns to be iXBRL-tagged and filed online, HMRC is in the embarrassing position of being forced to admit that its systems cannot accept the electronic files. In fact, it will not actually be ready to accept post-31 March 2011 returns until its online portal is updated in October.

In the face of much mockery and disbelief, HMRC has stated that because of the lowering of the Corporation Tax rate to 26% (20% for small profits rate) on 6 April, its software needs to be updated. Unfortunately, it has no plans to do so until October.

The official notice from HMRC explains that “the rate changes only affect returns with accounting periods that end on or after 1 April 2011 with filing dates of 1 April 2012 or later. These changes will take effect on the date that Finance Bill 2011 receives Royal Assent (expected in July 2011). Corporation Tax Online will then be updated in October 2011 with the new rates. In the meantime Corporation Tax online will use the old rates.”

Before the new rules came into force in April, people were allowed to file paper returns early. With this option being withdrawn, many who have taken the time and effort required to properly undertake iXBRL tagging and e-filing are extremely displeased to be told now that they will be unable to file returns till October.

Stewart Fletcher & Barrett partner Peter White comments: “It does seem to many people that HMRC should really ensure it is able to deal with the consequences of any new policies it decides to push through before it requires everybody else to comply with them. Unfortunately, as with all of these things, there will inevitably be additional costs for clients, but this is something that the Revenue completely dismisses. While the taxman demands that ordinary people abide by the rules, it would appear that he is under no such obligation himself!”

The Taxman Cometh!

New rules come into force today (April 6th) which will mean that anyone filing a late tax return will face significantly higher penalties than before. Because of this, it is now more important than ever to make sure that we receive all of the relevant information in time to beat the deadline.

HM Revenue & Customs is increasing the amount levied because the former £100 penalty “did not present enough of a deterrent.” Under the new regime, filing a tax return late will incur an initial £100 penalty on day one, even if you have no tax to pay or you have already paid all the tax you owe. If your return is filed three months late, you will be charged an automatic daily penalty of £10 per day, up to a maximum of £900. For returns filed six months late, the penalty will be either 5% of the tax due or £300 – whichever is greater. The same penalty will then kick in again at 12 months late and, for those who still haven’t filed once the 12-month deadline has passed, another potential fine of 70% of the tax outstanding will apply.

At Stewart Fletcher & Barrett, we work with you to ensure that your returns are filed electronically (as is now required), accurately and on time.

If you need any help with your tax return, please call us on 02476 384171.