Treasury to press ahead with new corporation tax technology
The Treasury looks set to stick to its time schedule for the introduction of anew computer system for the filing of company accounts.
The new iXBRL system is due to come into effect as from 1 April 2011.
iXBRL is the computer language in which most corporation tax returns are due to be submitted from that date.
Under the changes, all company tax returns sent in from April 2011 must be filed online for accounting periods ending after 31 March 2010 and in the Inline XBRL or iXBRL format.
Corporation tax payments must likewise be made electronically from April 2011.
The changes are not confined to limited companies. The new rules will apply to other organisations that pay corporation tax, including clubs, societies, associations, co-operatives, charities and other unincorporated bodies.
A number of leading accountancy and professional tax bodies recently wrote to David Gauke, the Exchequer Secretary, urging a delay in the implementation of the new system.
Although the submission of corporation tax computations is going well, the Chartered Institute of Taxation (CIOT) highlighted problems with statutory accounts.
The CIOT also suggested that companies planning to use other software solutions for preparing iXBRL-compliant accounts are facing difficulties.
Anthony Thomas, the CIOT president, admitted that he was “enthusiastic about online filing and even happy with filing in iXBRL for the tax computations”, but he went on to point out that “business is not ready for filing statutory accounts in iXBRL at this stage”.
However, David Gauke has re-iterated the Government’s intention to keep to the current introduction timetable.
The Minister said: “My objective is the smooth introduction of mandatory online filing of CT returns in iXBRL format from 1 April 2011. It seems to me that there will never be a perfect time to mandate filing in iXBRL. There will always be implementation challenges, and HMRC’s challenge here is to work through them in collaboration with the representative bodies.”
Mr Gauke promised that HMRC will take an understanding approach during the first two years of the new system. Companies that make reasonable errors in their corporation tax submissions will not face any penalties.
Meanwhile, HMRC has issued an outline guidance on managing the switch to the mandatory online filing of company tax returns.
Acknowledging that the change is significant, HMRC has addressed some of the possible concerns and uncertainties that may surround the transition.
More details can be found at http://www.hmrc.gov.uk/ct/mandatory-online-filing.pdf