Recommendations
Electronic strategy

1. We recommend that the Government should set an aspirational goal for HMRC that it should aim for universal electronic delivery of business tax returns by 2012. It should also aim for universal electronic delivery of individuals’ tax returns from IT literate groups by the same date.

2. We recommend that HMRC should benchmark customer satisfaction with its online services against commercial online services and seek to learn from best practice.

3. We also recommend that HMRC should work with other public and voluntary organisations to ensure that access to the internet, and appropriate assistance with using IT, are available locally, for example at libraries and UK Online centres, for taxpayers who wish to file their returns online but do not own a computer.

Business and employers

4. For businesses and employers we recommend:

VAT

Large, medium-sized (those with turnover above £5.6 million a year) and newly registering traders should be required to file their VAT returns online, and make payments electronically, for accounting periods starting after 31 March 2008.

Traders with an annual turnover in excess of £100,000 should be required to file their VAT returns online, and make payments electronically, for accounting periods starting after 31 March 2010.

Paper filing will remain an option for traders with turnover below £100,000 but the Government should review the need for this exception in the run-up to 2012.

CT

All companies should be required to file their company tax returns online, using XBRL¹, and make payments electronically, for returns due after 31 March 2010.

PAYE

Large and medium-sized employers (those with 50 or more employees) should be required to file in-year forms (P45 and P46) online from 1 April 2008.

Small employers (those with fewer than 50 employees) should be required to file in-year forms (P45 and P46) online from 1 April 2010.

Data quality

5. We recommend that HMRC should establish a Taxpayer Data Standards Forum, with membership drawn from a cross-section of employers and chaired by an independent external person. The forum should be tasked, over a 1–2 year period, with identifying and disseminating best practice for cleaning data and maintaining quality.

Filing periods

6. We recommend that consideration should be given to reducing the filing periods for income tax self assessment (SA) and company tax returns, to bring them closer to the international norms, and that HMRC should offer extra time for online filing of SA returns.

7. For SA taxpayers, we recommend that from 2007-08 the filing period for paper returns should be reduced to six months – the new deadline should be 30 September – and the filing period for online returns should be reduced to eight months – the new deadline should be 30 November.

8. HMRC already offer VAT traders an extra 7 calendar days to submit their VAT returns online. We think this is a good incentive for online filing and should be continued, at least until April 2010.

9. We recommend that the period that HMRC have to query SA tax returns and most² company tax returns (the ‘enquiry window’) should be linked to the date that the return is submitted. This will promote earlier filing and give taxpayers certainty sooner.

Paper substitute return forms

10. We recommend that HMRC should stop accepting computer generated SA ‘substitute’ returns on paper, from April 2008 for 2007–08 and subsequent returns.

Payment

11. We recommend that HMRC should review the payment rules for the different methods of payment and different types of taxes and consider what changes should be made to harmonise the rules.

12. We also recommend that HMRC should provide an electronic payment facility on its website which would allow taxpayers to set up a future electronic payment. This would enable taxpayers to complete the filing and payment tasks in a single session.

Working with agents, software developers and other intermediaries

13. We recommend that HMRC should offer agents workshops on online services, possibly in partnership with software developers, in the run up to the implementation of our recommendations

14. We also recommend that HMRC should offer an agent registration scheme. This could enable potential clients to identify agents that are registered for and using HMRC online services. Agents that apply for the scheme could be required to abide by a Code of Practice.

15. We recommend that HMRC should consider offering agents a regular email newsletter, which could update them on developments relating to online services and respond to common queries.

16. We also recommend that HMRC should provide a list of consultation forums on their website, details of the matters which are considered by each group and how to contact members of those groups.

17. We recommend that test services for software developers should be provided for all services at least 6 months before major changes to tax returns or the online services.

18. We also recommend that HMRC should share more of the risk rules used to select cases for enquiry with software developers.

19. We recommend that HMRC should explore the idea of an online forum for software developers with the software developer bodies to see if it could offer an opportunity for enhanced collaboration between HMRC and developers.

20. We recommend that HMRC should look closely at how it both produces standard letters and provides online forms to see if it can do so at lower cost using new technology, while still giving customers a good experience.

Working with other government departments

21. We recommend that HMRC work with DWP to speed up the issue of work-related NINOs for adults both through links with other departments and through exploring the idea of a ‘work-related NINO’.

22. We endorse the recent joint consultation by HMRC and Companies House about alignment of filing dates and recommend that HMRC should continue to work with Companies House to provide a joint filing facility by 2010.

The building blocks

23. We recommend that as part of their work to deliver robust, high-capacity services HMRC should build in more rigorous testing. Each of the services should be capacity tested at least a year before our recommendations are implemented, and if any tests are not successful the measures relating to that service should be deferred.

24. We recommend that HMRC should streamline the processes by which taxpayers authorise HMRC to disclose confidential information to their agents.

25. We also recommend that agents should be able to file returns for clients who have not yet given HMRC authorisation to disclose.

26. We recommend that HMRC should streamline and align the requirements for client approval of a return so that it may be done electronically in all cases.

27. We recommend that HMRC, working with the Government Gateway, should improve the facilities for managing the secure credentials required to access and use online services.

28. We recommend that HMRC should continue to support digital certificates, but not compel customers to use one.

29. We also recommend that HMRC and the Government Gateway should, working with agents, consider how the processes for delegating authority to file and access client data within large agent organisations could be improved-for example, by enabling bulk uploading and downloading of data.

1.Extensible Business Reporting Language - an XML-based format for financial reporting.

2.Different rules may need to be applied for group companies.