.png)
.png)
HMRC’s programme to increase digital submission of returns has made laudable progress, according to the National Audit Office (NAO).
In its report The Expansion of Online Filing of Tax Returns, the NAO acknowledges the Revenue's success in increasing take-up rates, and doing so on time and within a reduced budget.
‘HMRC’s expansion of online filing has been a real achievement. The programme is largely complete... and more than 11 million customers are filing online. It is an integral part of the department’s drive to increase efficiency,’ said NAO head Amyas Morse.
However, his office's new document insists the taxman must develop a better understanding of the benefits and costs to taxpayers and of how online filing costs compare with those for paper returns.
‘Significant improvement is needed,’ Mr Morse added.
By the end of 2010/11, take-up rates for PAYE in-year returns and income tax self assessment had increased to 94% and 77% respectively, broadly in line with forecasts. The rates for VAT and corporation tax had grown to 67% and 42% respectively, each about 20% below forecast.
Rates for PAYE, VAT and corporation tax have increased further during 2011/12.
In the light of the percentages achieved and greater knowledge of customer behaviour, HMRC have lowered their forecast of take-up by 2012 from 100% to around 97%.
Online filing is delivering significant savings to the Revenue: an estimated £126 million so far. The 2007 forecast was for savings of £145 million by the end of 2010/11, but the programme was subsequently rescoped because of departmental-wide funding pressures.
According to the NAO report, HMRC cannot demonstrate they are maximising benefits because they do not yet fully understand the relative costs of dealing with paper and online returns or the costs and benefits of seeking greater take-up.
The president of the Chartered Institute of Taxation, Anthony Thomas, said his organisation was pleased the NAO has ‘picked up some of the concerns around HMRC needing to obtain a better understanding of the costs and benefits of online filing, for not only themselves but also taxpayers and their agents.
‘In particular, the NAO acknowledges that HMRC have not assessed the cost to customers of filing using iXBRL2, nor whether HMRC’s online filing systems provide good value for money,’ added Mr Thomas.
‘Most iXBRL software does not automatically tag the required company accounts data, and there have been high failure rates when returns are first submitted, resulting in increased preparation time and burdens for business.’
Andrew Moore, Andrew Moore Limited, writes...
I read with interest this article, in particular the comments of Anthony Thomas, president of the CIOT, of the need for HMRC ‘to obtain a better understanding of the costs and benefits of online filing for not only themselves but also taxpayers and their agents’.
As a sole practitioner, may I indicate the costs to me and my corporate clients of the requirement for accounts to be filed in iXBRL?
I very much doubt that my experience is much different from many sole practitioners around the country.
Having, over the years, obtained considerable familiarity with Excel, I have always used this medium for preparing client accounts and related working papers.
The ability to create macros and the sheer flexibility of being able to prepare accounts tailor made to a client’s individual circumstances and disclosure requirements have made that format very advantageous.
The saying that no two clients are the same is as true now as it has ever been.
I have never found an accounts production package that gives the same flexibility in producing a different form of accounts for different clients and have therefore stuck with Excel. I intend to continue that practice.
The problem for me was therefore how to comply with the iXBRL filing requirements for corporation tax while continuing to produce corporate client accounts in Excel as hitherto.
Ultimately, I bought an inexpensive accounts production package (at a very modest cost of around £100 – for what it is the software represents enormous value for money).
Having produced the Excel accounts in the format required by clients and they having approved and signed the accounts it is now necessary for me to input the data into the software separately to generate iXBRL accounts that may be filed online with HMRC.
The accounts so produced satisfy the requirements and I have not found it too difficult to tag some freeform notes (e.g. related party disclosures) using the concepts and taxonomy tagging within the package in order that all aspects of the accounts are iXBRL compliant.
Certainly, they have all been accepted so far when filed with the corporation tax returns online.
The cost in terms of the extra time involved in what is in effect a double production of the accounts is significant. Whether I bear it or pass it on to my clients is, in the context, irrelevant.
Some may say I am antediluvian and I should be using the package itself and give up on Excel.
But if my handling of Excel produces a more informative and readable package for my clients why should I do so?
Moreover why should HMRC dictate a course of action that leads to this result?
The crux of the matter is this: HMRC has been ordered to cut costs. Obtaining information from corporate accounts without human intervention is, for government, an attractive option.
I do wonder whether the information so obtained will be always relevant for corporation tax purposes or whether it is a backdoor method of obtaining better statistics on the UK economy; either way the basic idea is laudable and not to be dismissed.
But when it comes to the costs involved government needs to look at matters in a much wider view than I suspect has happened so far.
The costs to the private sector will I am certain be infinitely greater than the advantages accruing to Government from all this extra information they obtain.
The speed with which HMRC introduced this radical requirement left many of us absolutely breathless at their high handed approach.
If the loss of the tax take through the additional costs imposed on the private sector by iXBRL (more cost less profit) could be quantified then I wonder whether the forcing through of the mandatory requirement to submit only in iXBRL will have been thought worthwhile for the UK as a whole.
Tunnel vision in one government department may, if not supervised from on high by a more balanced thinking through of the whole, actually cost the UK dear.