Tax returns system needs improvement

HM Revenue and Customs (HMRC) must provide a reliable and easy-to-use system for filing Corporation Tax returns online before making it compulsory in 2010, say MPs.

The influential House of Commons Public Accounts Committee says mandatory electronic filing has the potential to make significant savings for HMRC. But the system has to be robust and well proven before it is made the only option.

The committee report published last week also says the department aims to introduce a system for filing company accounts and tax returns online this summer.

‘Only two per cent of firms are filing their Corporation Tax returns online,’ it says.

HMRC faces a ‘significant challenge’ linking existing IT systems and bringing them up to date, says the committee. But electronic filing should eliminate the need to re-enter data.

Until recently, accounts supporting a return could only be filed as a hard copy or a pdf. A new system accepts accounts in a format that can also be read by the department’s computers.

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