Tag Archive | "online filing"

There’s no excuse for late filing of tax returns, or is there?

Today really is the last day that you can file their self-assessment returns without receiving a late filing penalty from HMRC.

Normally, returns should be filed by midnight on January 31st, but this year the Revenue extended the deadline to February 2nd because members of the Public and Commercial Services Union were taking industrial action on the 31st and members of the public would struggle to get through to HMRC call centres.

The Union hailed the strike as a success, saying 14,500 members of staff did not report for work. Volunteers staffed revenue enquiry centres and there were huge backlogs at call centres.

At first glance it seems a sensible move for HMRC to extend the filing deadline. It gave a bit of extra time to the estimated 90,000 individuals who were expected to phone asking for help with their tax returns on Tuesday. And these people would have swamped the Revenue will letters of complaint if they had been unable to do and as a result, received an automatic fine.

However, the extension will not help those people who had not already applied for the unique reference number they needed to enable them to complete their return online. This is sent out by mail and can take up to 7 days from date of application to arrive.

HMRC has been having major problems with their admin system over recent months. It takes weeks, sometimes months for people to get a written response to their queries, so a further deluge of mail would have swamped an already hard-pressed department.

The extension will probably will be seen as a compromise that should suit everybody. The extension has been widely publicised so there is really no excuse for filing late. Taxpayers have been given an extra couple of days to file, but the Revenue will no doubt still rake in the fines from people who had not received their URN and those who purposely ignore their filing requirements.

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Contractor accountants should prepare for online VAT filing

Now that the January 31st online self-assessment filing date has passed, accountants for contractors can turn their minds to online VAT filing.

HMRC recently reminded businesses that are registered for VAT that paper returns are about to become a thing of the past. As from this spring, all VAT returns have to be submitted online.

At the moment only newly registered firms and businesses with a turnover in excess of £100,000 have had to submit their VAT return online and pay electronically. All other VAT registered companies have been allowed to submit a paper return.

However, online filing will be essential for accounting periods that start on or after the first of April this year. This means that the 1.9 million UK businesses that are registered for VAT will have to enrol on HMRC’s website to use the VAT Online Service.

The Revenue will be sending letters to all traders this month advising them of what action they need to take.

There are various benefits to be gained from online filing. You will get an automatic acknowledgement as soon as your return has been received. The system includes a sum checker and probably most importantly, an email will be sent to alert you of when your next VAT return is due to be filed.

There is various information available on HMRC’s website to help businesses move from paper to online filing. The Revenue also has a VAT Online Services Helpdesk that can be contacted Monday to Friday, between the hours of 8am and 6pm, on 0845 010 8500.

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Contractor accountants: draw up a plan for filing your clients’ tax returns

Contractor accountants will have a busy month in January filing online self assessment returns for their clients.

As the January 31st deadline looms, it savvy accountants will already have drawn up a plan for dealing with the additional workload. However, if you have not already done so, the festive break would be a good time to start planning.

The first thing to do is ensure you know exactly what you’re up against. How many clients require you to complete their tax returns for them? Do you have all the details you need to proceed?

Are your clients fully up to date with any legislative changes and if not, should you provide them with training? On a similar subject, you must ensure your accounting software is updated to reflect statutory requirements, and if it isn’t install and test any updates sooner rather than later.

Effective communication with clients is vital at this time of year. Think about the problems you encountered during last year’s filing season and work together with your clients to find solutions. Also make sure your clients fully understand what information they need to provide you with, and when you need to receive it.

No matter how meticulous you are with your planning, problems will occur, but the trick is to spot them before they turn into a crisis. Make sure you review your progress on a regular basis and deal with any issues as soon as they arise.

Of course, once you’ve done all the hard work, you’ll be looking forward to receiving payment. Make sure all your clients know your payment terms before you start working on their return and send out your invoice as soon as possible after the work is completed. That way you should minimise the danger of late payment.

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HMRC reminds contractor accountants of important dates for the diary

HMRC has alerted all companies and contractor accountants that are registered for VAT that important changes to the filing process will come into effect in spring 2012.

As from April first next year, all VAT returns have to be filed online and all remittances must be made electronically. Under the present regime, only companies with a turnover of more than £100,000, and those that are newly registered have to use HMRC’s online VAT filing system.

The new regime will affect all returns for VAT periods starting on the 1st April 2012 and beyond.

The Revenue says it makes sense to switch to the online filing system now rather than get caught up in the last-minute rush. However, before any business can take advantage of the benefits of online VAT filing, they will first need to register with HMRC’s VAT Online Service.

Whilst businesses are thinking about filing their VAT returns online, contractor accountants should be concentrating on ensuring their online Self Assessment tax return is filed before the end of next month.

Taxpayers who have previously completed a paper Self Assessment return should register for online filing as soon as possible. The registration process is simple but HMRC warns that it can take up to 10 days for the Activation Code to reach taxpayers as it is sent out by post.

People who have previously used the online filing system should make sure they have not lost their login details, as they also will have to wait up to 10 days for a replacement.

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What do accountants for contractors think about online self-assessment filing?

The National Audit Office has praised HMRC for persuading people to file their tax returns online, but says it is not clear whether the system provides value for money.

The NAO says that more than 11.5 million people a year now use online filing. However, some users have complained about access to HMRC’s website at busy times and the Low Incomes Tax Reform Group is calling on the Revenue to offer other alternatives to people who do not have Internet access.

Online filing has reduced processing costs, as well as postal, stationery and storage costs. Cumulative savings by the end of this financial year are expected to be £220 million and the drive to persuade people to file online is on time and within budget.

However, the NAO says HMRC is not able to draw a comparison between the costs of paper and online filing. It is therefore impossible to conclude that the benefits of online filing are being maximised and the system has been successful in delivering value for money.

Robin Williamson from the LITRG said that it should not be made mandatory to use the Internet to conduct dealings with HMRC and robust, well-advertised options must be made available to people who cannot transact online.

It’s both reasonable and sensible to encourage businesses to use digital channels to communicate with the Revenue but the government department should not forget that some individuals do not have access to the Internet or the capability to cope with online filing, he added.

Some professional organisations have also questioned whether it is cost effective to file corporation tax and VAT returns online.

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SMEs may be forced to file their VAT returns online

Accountants for contractors may be interested to learn that HMRC has launched a consultation on the proposal to make online filing of VAT returns compulsory for firms with a turnover of under £100,000.

The Revenue wants more businesses, and individuals, to go digital and conduct their transactions online.

If approved, the VAT filing requirement will come into force next April. HMRC would also like to see all businesses use online systems for registering and deregistering for VAT and amending their company details. There are no plans to make the registration requirements mandatory yet.

The Revenue has been moving business taxation online since 2006 and online is fast becoming the default channel for business taxation. Lord Carter said in his original review of online services that legislation was necessary to combat general business inertia and that this should take place in stages.

HMRC says that processing will be both quicker and more accurate once filing is conducted online and that should appeal to companies.

However, the FPB says small businesses are paying the price of inadequate online tax systems and red tape continues to hold back SMEs ability to comply with tax regulations.

Andrew Needham, the tax advisor to the FPB, said the tax system includes complex and cumbersome online procedures. Furthermore, he said that HMRC employees received no training on dealing with VAT returns submitted electronically; a situation he found mystifying.

It now takes up to 50 days to complete VAT registration due to extended verification procedures and small businesses are suffering. Late payment of PAYE attracts penalties but small businesses are battling with the worst cash flow problems in 20 years.

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Should contractor accountants warn about late filing penalties?

ICAS has warned that as many as a million taxpayers could face penalties for late filing of tax returns and claims HMRC has not taken enough measures to notify the public of the changes.

As from the end of this October, anybody who files their paper self-assessment form late, even if it’s only by one day, will receive an instant fine of £100. After three months, the fine will increase by £10 for every day overdue. Even larger fines will be levied if filing is six months late.

It may be time for accountants for contractors to be at the forefront of reminding people!

The same rules will apply to people who file online as from January 31st 2012. ICAS has calculated that an online return due for filing at the end of next January, but held back until August 5 2012, would attract at least £1,300 in fines.

Since self-assessment began in 1997, almost one million people file their return late each year and many of them delay by more than 12 months. Until now, HMRC could not charge a penalty as long as the taxpayer paid all the monies owing.

ICAS’ director of tax, Derek Allen, said he was concerned that the majority of people are not aware of the new penalty regime as it has not been widely publicised.

The Scottish Institute also warns that some people could miss out on tax rebates. Self-employed people in the construction industry often have their tax deducted by the contractor initially and repayments are calculated after they have lodged their return. However, if they file late, the repayment is likely to be a lot less than the fine.

Small businesses and limited company contractors are also becoming increasingly tardy in filing their year end accounts with Companies House. The executive agency recently reported that 12,739 businesses were fined for late filing last month; up from 12,154 in May.

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Is PAYE weighing contractor accountants down?

A recent survey by Inuit shows that 69% of small businesses are put off recruiting new staff because of the burden of PAYE.

The software provider discovered that nearly 50% of employers did not realise that their end of year returns had to be filed by the 19th of May and 28% said they did not expect to meet the deadline.

Mark Linton, the founder of The Business Growth Show, said one of the major challenges facing small business owners is not the actual process of recruiting new staff, but what to do once they’re onboard.

PAYE for small businesses is a nightmare. “How do I pay staff?”, “Is government legislation getting in the way?” And “am I doing it right?” are all questions that worry small business owners, he explained.

In previous years, there was a seven-day grace period for people who missed the deadline but now that year-end returns have to be filed online, this has been removed. Employers who did not submit on time face a penalty charge of £100 per 50 employees for every month, or part month, that the return is overdue.

SMEs are also worried about the compliance checks HMRC is about to implement. Penalties of up to £3,000 could be imposed on businesses that have not kept accurate employee records.

Meanwhile, another survey, this time from the Clydesdale and Yorkshire banking group, has found that 10% of small business owners have been late making VAT payments and 19% have missed out on grants or tax breaks.

Whilst 15% of small business owners are bamboozled by new regulations, 16% said they did not know who to turn to for advice on business legislation. Gary Lumby from the banks said it was a matter of concern that SMEs did not know how to get help and the banks hope to remedy that situation for their clients.

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Contractor accountants should prepare for corporation tax changes

Accountants should be aware that the end of the present tax year is fast approaching and HMRC has reminded the UK small business community that changes to corporation tax are imminent.

As from the start of the new tax year, corporation tax filing and payments will need to be made electronically. Furthermore, all company tax returns for accounting periods that ended after March 2010 will also have to be filed in XBRL or iXBRL format.

Payment of corporation tax will have to be made by Direct Debit, credit or debit card, using either bank transfer or the BillPay service.

An HMRC spokesperson explained that these changes will affect associations, charities, clubs, co-operatives and societies as well as any limited company. Firms will be able to use commercially available software to file or the department’s own CT software aimed at firms with less complex taxation affairs, the Revenue added.

As from April next year, firms will also have to submit their VAT returns online.

Meanwhile, the Institute of Directors is calling on the government to reduce corporation tax until it reaches 15% in 2020. People are starting to think of the UK as a high-tax economy and that will not encourage foreign companies to invest here.

The IoD wants the UK to have the lowest rate of corporation tax throughout the world. It has estimated that this could be achieved at a cost of £9 billion a year, a figure which could be achieved by continuing restraint on public sector growth.

By reducing corporation tax to just 15%, the UK would be sending out the strong message that it is open for business.

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Plea to delay compulsory online filing as solutions aren’t ready

The CIoT and the other main professional accountancy and tax bodies have sent a letter to the Exchequer Secretary asking the government to reconsider the timing of compulsory iXBRL online filing. However, it seems unlikely that HRMC will bow to the request.

The ACCA last week flagged up the lack of software capable of handling iXBRL. Chas Roy-Chowdhury, head of tax at ACCA, said they had been trying to negotiate a deferral with HMRC for some time but the furthest they’ve got is a promise of a light touch on compliance when the system is first implemented.

Accounting software provider Sage has admitted that its new iXBRL product will not be ready in time for the corporation tax filing deadline of April 1st. The company says it will have an interim product available, but the release of the full version will be delayed. CCH has not yet delivered its integrated package but has indicated it will be ready in time.

It will be possible for people using Sage accounts production software to file UK GAAP and IFRS tax returns. They will receive a temporary product, ONESOURCE, from Thomson Reuters, which includes the minimum requirements for iXBRL filing.

Contractor accountants will be able to compile tax returns as usual within Sage software and then transfer the data into ONESOURCE. The majority of this process is automated but some IT experts believe this could add a lot of extra time onto the filing process.

In addition to understanding the mechanics of iXBRL, accountants using Sage now need to learn how to transfer data into ONESOURCE and there’s just 3 months left to do it. They will then need to learn Sage’s iXBRL product when it is released later this year.

Will this workaround cause accountants to lose faith in Sage and switch to another software provider? Only time will tell…

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HMRC back down over penalties

HMRC has been issuing a large number of incorrect VAT penalties over the last year and a half, according to UHY Hacker Young. In fact over 50% of the penalties that were issued to taxpayers were later overturned on appeal

Official data shows that of the 28,812 late or inaccurate VAT return cases the Revenue has reviewed, 16,270 were imposed incorrectly. A similar pattern emerges when you take into consideration the penalties issued for technical reasons across all taxes. 48% were subsequently found to have been issued wrongly.

Worryingly, many people do not query the penalty, said Simon Newark, a VAT partner at UHY Hacker Young. He also pointed out that whilst businesses try their best to understand complex taxes, if HMRC’s own employees also struggle, it seems highly unjust to make businesses suffer.

In related news, thousands of firms that should have filed their accounts with Companies House by the 31st December are now studying the appeals process.

In the first two weeks of the new year, almost 1,700 appeals were lodged against late filing penalties, including one business owner who says he sent his accounts by first class mail on December 16th. This should normally be more than enough time for mail to reach its destination but the icy weather conditions in December knocked the postal system for six.

Companies House has said the adverse weather was not spread across the entire country and is therefore an exceptional circumstance for a small number of companies.

Late filing fees, starting at £150, are automatically issued once accounts become overdue. Guidance on the Companies House website states that you can appeal the penalty but to be successful you need to prove exceptional circumstances and delays in the post do not normally qualify.

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Accountants for contractors can help take the heat out of tax returns

Freelancers should take note that HMRC is stressing the importance of filing online tax returns by the deadline date of the 31st January. Failure to comply with this will result in a penalty of £100.

The Revenue has advised people who are struggling to sort out their affairs to seek the advice of a specialist contractor accountant, tax adviser or contact the department for assistance.

All outstanding tax returns for the 2009 – 10 financial year must be filed by midnight on the 31st of January, a Revenue spokesman explained. People who have not used online filing before are also reminded that they need to leave plenty of time to complete the registration process.

Once you register online you receive a User ID and an Activation Code will be sent by mail within 7 working days. It will therefore be necessary to register no later than the 21st of January to make sure the Activation Code is received on time.

Leonie Kerswill, a tax partner at PwC, said that people tend to push their tax return down the priority list during the festive season but after over spending at Christmas it would be unwise to incur the £100 late-filing fine. She also reminded taxpayers that they need to pay the tax due on January 31st as well as filing the form.

Meanwhile, the PCG is organising a tax planning event in Manchester on February 2nd. The event will take place at the Mint Hotel and will deal with the importance of tax returns and record keeping as well as the changing IR35 landscape.

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Sunday tax help lines to stop operating

Contractor accountants might want to let their clients know that HMRC’s Sunday hotlines are set to close down as from the end of November.

The Revenue says that contact centre staff who work on Sundays will be redeployed at peak periods which should bring down waiting times and provide a more efficient service for everybody. HMRC also plans to change the opening times of its contact centres during the week to ensure peak periods are well staffed.

The majority of lines will be open from 8am to 8pm, Monday to Friday and from 9am to 4pm on Saturdays.

A recent survey carried out in Scotland highlighted some of the problems encountered by people trying to communicate with the Revenue. Members of the Institute of Chartered Accountants were asked about their experiences and results showed that 43% of HMRC’s systemic errors and shortcomings were due to poor communications. This is a big increase from the 13% reported 18 months ago.

The director of tax at the Institute, Derek Allen, said there has been a drastic deterioration in facilities for contacting the Revenue over the last year. He pointed out that phone calls to the help desks go unanswered and letters sent could lie for months before they get opened.

Allen also remarked that many of the staff do not appear to have adequate training to help them carry out their allotted role and so technical questions relating to tax matters are passed from pillar to post. He believes urgent action should be taken to simplify the tax system.

Other concerns raised by the survey included problems with online filing and long delays before tax repayments are received.

Earlier this month, the National Audit Office published a new report ‘Engaging with Tax Agents’. It suggests that systems could be improved if HMRC and tax agents worked more closely together. In the light of the number of complaints against them, the Revenue may want to consider taking that advice on board.

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Online accountants can see iXBRL software in action

Accountants in the Birmingham area may benefit from visiting an event to be run by HMRC.

On November 3rd, the Revenue will be holding the last of its iXBRL events. This event will showcase accounts production and conversion tools that can convert existing data into iXBRL format for the filing of Corporation Tax returns.

HMRC has already run a couple of similar events in recent months, however the London event in June was probably held a bit too early as working versions of the software were not readily available at that time. People really have to see the program to appreciate the way it works, a programme manager from Carter commented.

The accounts/tax software production industry should have more commercially released products to show by the time the Birmingham show comes around. Forbes Computer/Absolute Accounts, TaxCalc and QMS have already launched iXBRL software and IRIS and Thomson Reuters will be launching products in the not too distant future.

A survey conducted earlier this year by CCH showed that many accountancy firms were not prepared for the new online submission system. As from 1st April next year, corporation tax returns must be filed in in-line eXtensible Business Reporting Language. This could cause problems for accountancy firms that file clients’ corporation tax returns from third party data as this is often in either paper or pdf format.

If you want to go to the Birmingham event, HMRC would like you to telephone the bookings team on 0845 603 2691 so they have an idea of the number of visitors who will attend the morning and afternoon presentations.

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