Inland Revenue Publishes E-Filing Regulations

by Jason Gorringe, Tax-News.com, London

17 April 2003

The UK Inland Revenue has published draft regulations concerning mandatory electronic tax filing for medium and large companies announced in last year's budget by Chancellor Gordon Brown.

The new rules stipulate that firms employing 250 or more employees will have to submit their 2004/2005 and subsequent tax returns electronically. Firms employing 50 to 249 employees will need to be compliant with this rule from the 2005/2006 tax year onwards.

Penalties for failing to file an electronic return will range from £600 to £3,000. However, the larger amount will only apply to businesses employing 1,000 or more.

Smaller firms will not be required to file their returns in this way until the 2009/2010 tax year. However, those that do file electronically before this deadline will be offered an incentive payment for every year between 2005 and 2009, the Treasury draft stated. This will be £250 between 2004 and 2006, £150 for the year 2006/2007, £100 for 2007/2008, and £75 for 2008/2009.

In another step towards the e-society, an announcement in this year's budget requires large firms with 250 or more employees to facilitate payments electronically from April 2004. The Inland Revenue however intends to adopt a later due date for electronic payments to compensate those companies who lose the cash flow advantages of cheque payment. It is also hoped this will act as an incentive for smaller firms to pay electronically. Draft regulations for these measures will be published in June.

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