MPs call for rise in online tax returns

HM Revenue and Customs (HMRC) needs to encourage more use of online tax returns to reduce the level of errors in the self-assessment system, say MPs.

A report published this week by the Public Accounts Committee says that online filing of tax returns is cheaper and more accurate than the paper version, but only 17 per cent of UK returns are filed electronically compared with 44 per cent in the US and 83 per cent in Australia.

‘The department should encourage more use of e-filing by making it more user-friendly, for example by pre-completing parts of the online tax return forms with data it already holds,’ says the report.

The committee says that at least 30 per cent of self-assessment returns contain mistakes made by the taxpayer, which cost £2.8bn in lost tax, and five per cent of returns contain errors made by the department, which result in incorrect tax deductions through PAYE in the following tax year.

HMRC has a target of 35 per cent of returns filed online by 2007-08, and 25 per cent in the current tax year. The department estimates that 17 per cent of returns were filed electronically in 2004-05.