CIOT warns of possible fines of up to £3,000 for employers who fail to file tax returns electronically. NEW FINES WARNING
The Chartered Institute of Taxation, CIOT, is warning employers that they could face fines of up to £3,000 under provisions in the current Finance Bill if they are not ready to file their tax returns electronically in the near future. The CIOT believes that greater use of electronic communication is the way forward, but that it should be by way of encouragement, not compulsion.
John Whiting, CIOT President said:
“Whilst we fully support greater use of e-filing and electronic communications generally, the moves should be carrot and not stick. The systems should be made attractive to employers so they want to use them, rather than being made compulsory with penalties for those unable or unwilling to use them. We are asking the Government to rethink this approach and make sure they take us down what is the right road in the right way.”
The CIOT believes that there are considerable administrative efficiencies to be gained for all involved with the tax system from electronic communications – but that as most of the benefits will accrue to the Revenue, those benefits need to be shared
John Whiting continued:
“One wonders if the Revenue is going to impose this regime on a small employer who is happy with their handwritten records, or the mother who employs a nanny or indeed the elderly person who employs a carer. Wouldn’t it be better to look at helping these people with their payroll burdens, not imposing more?”
The CIOT is also asking for reassurance from the Government that there will be proper Parliamentary scrutiny for any extension of this new electronic filing regime to other tax returns.
NOTE TO EDITORS:
The proposed new regulations appear in Clause 132 of the current Finance Bill, which puts into effect the proposals in the Chancellor’s Budget statement, In turn, the moves on Electronic Filing follow the Carter Report which proposed the sort of system outlined in the Finance Bill. The CIOT raised similar objections to the mandatory regime proposed by Carter.
Clause 132 introduces mandatory electronic filing for employers. This means that the Inland Revenue will have power to force employers to send all their returns in electronically and fine those – a maximum figure of £3,000 is mentioned in the Bill – who do not.
The clause gives the Revenue power to bring in Regulations – which would be subject to no real Parliamentary scrutiny – which require or impose:
- Persons to prepare and keep records of information delivered electronically
· Persons to produce the contents of records kept in accordance with the regulations
· Conditions that must be complied with in connection with the use of electronic communications
· Information to be treated as not delivered where conditions as to delivery not satisfied
· A process for authenticating electronic records and persons delivering electronic information
· A penalty of £3,000 for failure to comply
· Quality standards to be set
· Taxpayers having to appeal against a notice that they are “within a category of persons” required to submit electronically