All UK companies could be filing their business tax returns online by 2012 if proposals for the HM Revenue & Customs (HMRC) electronic delivery strategy are adopted.

Lord Carter of Cole’s review of the department’s online services, published last week, recommends the adoption of ‘aspirational’ goals for the mandatory electronic filing of a variety of tax returns.

The review suggests interim targets of online filing of VAT returns for larger companies from March 2008, and electronic Corporation Tax return filing from 2010.

HMRC will invest £340m in online services infrastructure over the next nine years, with a view to saving taxpayers £175m a year by 2012/13, and generating administrative savings of £84m a year by 2013/14.

In egovernment terms, HMRC is one of the most advanced departments, but usage figures still reflect concerns about e-services.

‘The range of online services offered by HMRC is comparable with the best overseas international tax authorities, but the rates of adoption are relatively low,’ says the report.

‘In part this reflects customers’ frustration with some of the services and doubts about their resilience, but it is clear that there is some reluctance to engage with the government online.’

Alongside service development, HMRC should work with other organisations to ensure widely available internet access from libraries and other public centres. The department must also focus on responding to

customer needs and developing reliable technology to make online services more attractive, says Carter.

‘The most important thing HMRC needs to do is to focus on building robust services that can cope with high-volume usage at peak times,’ says the report.

Carter’s report recommendations include close working with developers and suppliers, replacement of outdated portal technology, and collaboration with other departments to streamline citizen and business interaction with government.

HMRC

•  HMRC will spend £340m on online service infrastructure in the next nine years.
• More than 60 per cent of small employers file PAYE online, and nearly a quarter of self-assessments are made electronically.
•  Processing a paper self-assessment return costs £8 more than the equivalentonline submission.