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Working together
The Revenue has recently published issue 10 of its Working together newsletter. Extracts from the newsletter follow below.
Automatic carry back claims
From 6 April 2002, the Revenue has been able to process carry back claims automatically. This applies where a claim under Schedule 1B is made in an original self-assessment return. A further enhancement to deal automatically with Schedule 1B claims in amended returns is being worked on for 2003-04.
Working together
The Revenue has recently published issue 10 of its Working together newsletter. Extracts from the newsletter follow below.
Automatic carry back claims
From 6 April 2002, the Revenue has been able to process carry back claims automatically. This applies where a claim under Schedule 1B is made in an original self-assessment return. A further enhancement to deal automatically with Schedule 1B claims in amended returns is being worked on for 2003-04.
The self-assessment system will take the figures from boxes 18.5 and/or 18.8 (or the calculated relief in a Revenue calculation case) and consider the accounting position for the current return year and previous year. Automatic free-standing credits will then be created with the correct effective date of payment, and these will be posted to the statement of account at the same time as the information from the return. These credits will be allocated firstly to any outstanding charges using the current payment allocation rules and repayments, plus any repayment supplement due will be generated automatically.
Late filing penalties
From October 2002, the computer system will be changed to cap self-assessment late filing penalties to the amount in box 18.3 of the self-assessment return less any amounts paid on or before the statutory filing date automatically.
The Revenue will not know to cap a penalty until it has processed the return and established the liability for the year. However, if the penalty is issued after a late return has been processed, the penalty notice will reflect the capped amount, even if this is nil. If the amount of tax and Class 4 National Insurance contributions payable is later increased, the penalty will also increase and interest will be charged.
Coding of underpayments
From 4 October 2002, the Revenue's self-assessment computer system will be changed so that 2001-02 self assessment underpayments of less than £2,000 can be collected automatically by restricting the pay-as-you-earn code for 2003-04. This currently has to be done manually. This change to the system means that the Revenue can extend the dates by which it guarantees to code out the underpayment, if the return is filed electronically. The extended dates will apply to future years and are:
New date Electronic method for sending tax return
29.12.2002 Electronic lodgement service
30.12.2002 Internet
(Source: Inland Revenue Working together issue 10 September 2002.)
Extra question
The Revenue has added a question and answer to its frequently asked questions in the self assessment area of its website, stating that the '30 September deadline has no significance' for taxpayers who use the Internet service for self assessment. It goes on to say that provided taxpayers send their returns to the Revenue by the 30 December using the Internet service for self assessment:
* their tax will be calculated for them; and
* pay-as-you-earn taxpayers will automatically have any tax owing up to £2,000 for the year to 5 April 2002 collected through their pay-as-you-earn coding in the tax year beginning 6 April 2003.
The latter point is covered in the latest issue of Working together.
(Source: www.inlandrevenue.gov.uk)
What future for ELS?
The Inland Revenue has finally admitted that it intends to withdraw the electronic lodgement service 'at some point' after April 2004, 'once confidence is established in the new Internet based services'. However, as promised, the Revenue is consulting about how to encourage electronic lodgement service users to migrate to filing by Internet, and has issued a short consultation document to this effect.
In the document, the Revenue says that since its inception in 1997, the 'electronic lodgement service has proved an effective means for many agents to file self-assessment returns electronically and last year accounted for over 340,000 returns'. It then refers to the Internet based filing solution for agents introduced in August 2001, and says that the 'Revenue is committed to enhance further the Internet based self assessment filing services for agents and to provide a level of functionality equal to, if not better than, that provided by electronic lodgement service'. The Revenue gives its reasons for wishing to withdraw electronic lodgement service and encourage filing by Internet as follows:
* Encouraging agent take-up of electronic filing by reducing the cost and technology barriers associated with the proprietary electronic lodgement service infrastructure and software.
* Providing a comprehensive integrated suite of agent services through our Internet portal extending beyond returns filing to cover other transactional and information services.
* Enabling agents to exploit their investments in existing software and infrastructure such as high speed internet access.
* Reducing the overhead on software vendors and the Revenue in supporting the two formats.
* Reducing the level of uncertainty in the market.'
The Revenue then says that is 'considering the migration options for current electronic lodgement service users and welcomes representations from all interested parties'. Comments should be sent to: Tim Wright, eServices, 3rd Floor, Bush House, Strand, London, e-mail: tim.wright@ir.gsi.gov.uk. The deadline for comments is 30 October 2002.
Allison Plager comments that the withdrawal of the electronic lodgement service was inevitable, and there is no doubt that filing by Internet is in theory the better option, as it is both faster and simpler than the electronic lodgement service. However, at the moment (taking the April 2004 date), the Revenue has allowed itself only one-and-a-half years to prove to agents and taxpayers that it can provide at least the same functionality, and perhaps more crucially, reliability with the filing by Internet service.
