Within the next 12 months small businesses will be able to file VAT returns directly from their accounting software, according to plans published by HM Revenue & Customs (HMRC) last week.

Companies can already file VAT returns electronically, and in April 2008 paper filing will start to be phased out. But at the moment the process requires a separate login to the HMRC web site.

‘It has been a big disincentive that you cannot file direct from your accounting package,’ said Jim Norton, senior policy adviser at the Institute of Directors.

‘These changes will sharply drive up electronic filing.’

HMRC is also investigating the development of a single point of registration for all departmental functions.

The government wants companies to file all their tax returns online by 2012.

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