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Jennifer Adams comments on HMRC's efforts to persuade accountants to use online filing facilities and related issues.

Introduction

For me 19th November 2007 will go down as one of my ‘where were you when…?’ dates – not quite as important as when I heard the news that Diana was dead; of the Twin Towers and the 7/7 London bombings but still memorable.

19th November 2007 was the day when the Head of HMRC was forced to resign and co-incidentally that day I was attending a seminar in Bournemouth’s Menzies Carlton Hotel given by HMRC’s Online Services Group who were trying to persuade a group of hardened accountants that HMRC were on track for full online tax return submission by 2012 (securely and efficiently, of course!)

To give them their due the Team giving the seminar were clear and informative; showing that they were trying to adhere to the ‘Working Together’ ethic by answering all the questions thrown at them by delegates and taking on board comments made, promising to pass them on to the higher echelons of HMRC. The 2½ hour session was an opportunity for dialogue on both sides.

The main message of the session was the ceasing of the submission of computer generated ‘substitute’ returns on paper being one of the Carter recommendations – the re-keying in of the details on these returns being a waste of Revenue staff’s time and leading to potential errors. As we know there will be a ban on the submission of paper substitutes of the three main SA returns – for Individuals, Partnerships and Trusts - for the 2008 return onwards. However, where the seminar was most interesting was in the detail of what alterations had been made to the 2008 Return itself and the ability to submit and how the Revenue envisage the method of submission in the future. The comments centred round the Revenue’s own website return but were still relevant to the 3rd party software prepared returns.

The contents of the ‘pack’ that we were given can be obtained from the Revenue website and it was stressed that the Revenue use the ‘Working Together’ section of their website to announce all revisions and alterations; it is possible to receive an automated email message notifying when something of interest has been placed there.  Practitioners might also like to look at the area entitled ‘Enhancements under Consideration’ which as the heading indicates shows the possible alterations to both future returns and to the methods of submission that are currently being considered.

What follows below are bullet points of comments made by the Team during the session in response to questions asked by the delegates; the reader won’t necessarily find these on the Revenue website but they may still be of interest.

Use of online filing

• The aim is for all online filing of all returns SA/CT/PAYE etc. etc. by 2012.
• Jan 2006 there was obviously a large increase in the PAYE returns submitted as a result of incentive payments.
• They were surprised at the lack of take up for submission of CT returns.
• Not many VAT returns are submitted online and it was thought that the reason for this was that agents themselves have to be VAT registered – this is being looked into.

Alterations to 2008 SA Return

• Paper substitutes cannot be submitted after 31 Oct 2008, however the Revenue’s own paper returns can be.
• There was a comment made about not being able to load more than 28 characters in some boxes of the returns – was this going to be altered? This apparently is a problem in the writing of the original software and would cost too much to alter now and as such is not being considered.
• The 2008 returns will contain a ‘more robust’ Question and Answer section on page 2.
• You will now only receive the pages you want and as such the user will be able to build their own ‘Short form Tax Return’.
• The new return will automatically be ‘populated’ with some details held by the Revenue system for example, Box 18.1 will be completed as will Boxes showing the Date of Birth and State Pension figures.  
• ‘Pre Budget’ has already announced that the ‘3 Line Accounts’ on the Self Employed pages will be £30,000 rather than the £15,000 it is currently.
• If the entry made in Box 3.29 of the Self Employed pages is less than the VAT limit you will automatically be given a reduced number of pages for completion.
• If the CGT pages are completed then full CGT computations will be required, submitted as an attachment.

Other points (SA and CT returns)

• As from April 2009 the Revenue website will enable the submission of past years' returns - 5 years' past returns.
• There are no current plans to enable the submission of R40’s. However, this is the subject of a feasibility study.
• The Revenue don’t want to receive CIS vouchers.
• Many practitioners are themselves trying for less paper in their files and from the Revenue’s view there is no need for what is deemed a ‘wet signature’ on Page 10. The client does not actually have to sign Page 10 of the return – all that is needed is the client’s agreement. Therefore the client can be emailed and asked for their agreement in writing. The Revenue only requires written confirmation of authorisation. Many practitioners are sending the returns to clients by password-protected and alteration-protected email asking for just page 10 to be returned signed for their files.
• On the CT submitted return you can currently submit and then make one alteration which saves the time of having to write a s9 ‘error and mistake’ claim letter. From next year that facility will be possible for SA returns.
• Also from next year the date of enquiry starts from the actual date of submission  rather than the due date of submission.
• There is currently a 5 day turn around for 64-8 authorisation. The current form needs to be sent to Longbenton rather than the local office. A copy of the current form is included on the ‘Working Together’ Update section of the HMRC website and gives the address to which to send.
• Can't submit a 64-8 online without a UTR and that system will continue.
• Although substitute 2008 returns are no longer allowed previous years' substitute forms will be.
• The Revenue are looking to rewrite ‘error’ messages in plainer and clearer English.
• There was a request for a more up to date Statement of Account section but we're told that Statements of Account are loaded at the same time as paper ones and there are no plans to change this.
• Some of the ‘Agent’ telephone numbers have changed and can be found on the ‘What's New’ section of the HMRC website.
• By 2010 there will be a facility whereby if the return pages relating to a particular client are updated then you will be advised by email.
• It is hoped that by 2012 there will no need to convert the forms into pdf format for submission – they will be in Word format.
• The Revenue are working with Companies House towards a ‘Joint Facility’ method of filing so that the information declared to Companies House will be automatically defaulted to be shown in the return boxes of the CT tax return.

And….

There was concern amongst the delegates that the area of Bournemouth in particular, has a number of elderly persons who are required to submit annual SA returns but cannot afford the accountant's fees to do so. Bournemouth Tax Office (in common with other offices) no longer has the facility to help them. It was stated that if such a person (or someone who does not have the use of a computer) visits the office they will be able to lodge the return on the Revenue website via use of their computers however, the staff will not be able to assist in the teaching of actually how to complete the return.

Subscribers might like to note that ‘TOP’ – ‘Tax help for Older People’ ( http://www.taxvol.org.uk/index.htm )will submit/ prepare the Tax Return online for free; the limit of income is £15,000.

Conclusion

The seminar was the last in a series of 100 given by the Team all over the country and there will be a second ‘series’ starting in February after the ‘January rush’.

If you ever get an invite to one of these events do try to make time out of your busy schedule to attend – it is free and gives valuable insight into how the Revenue are trying to implement the Carter Recommendations and the current timeframe for doing so. Whether the date for implementation will be delayed even further in the light of the Child Benefit/HMRC disc loss remains to be seen but attendance at one of these seminars will ensure that your systems and procedures are up to date.

You also learn that your submission problems are not uncommon and you can put your concerns directly to your local HMRC Online Business Development Consultant who will at least listen … and you receive a lovely cup of coffee for your trouble.