Taxman banks on BACS to solve e-filing problem

Taxpayers are to be offered a new way of filing tax returns through the bank clearing system, in a move that could resolve some of the tax authorities’ longstanding technology issues, but could see taxpayers paying a fee.

An executive committee led by HM Revenue & Customs head Sir David Varney has agreed to use the banks automated clearing system (BACS) to file tax returns – an idea first suggested by a report produced for the prime minister.

HMRC is pursuing a scoping study with BACS, and a working group of the professional bodies is looking to test the viability of the idea, which may even be in place within the next two to three years.

The initiative has been prompted by the huge difficulties HMRC faced in creating and maintaining a computer network for online filing.

Though officials regard the scheme as a success, despite much criticism, projected increases in online filing of several hundred per cent have encouraged them to look further afield.

Voca, the company that runs BACS for the banks, is thought to be unconcerned by the volumes it would have to transmit. The new system would be in addition to current filing methods, which cope with the tens of millions of tax returns filed each year.

The plan would allow PAYE returns, corporation tax returns, self-assessment returns and construction industry scheme returns to be filed through BACS. Taxpayers would be able to transmit returns with additional material (not possible with e-filing at present), and be able to get a secure audit trail from BACS to prove they had met deadlines.

Discussions are underway as to whether using the third party would imply a cost to the taxpayer per return. No figures have yet emerged.

‘The view is that it would be unlikely to cost taxpayers much or, if anything, very little,’ Anne Redston, the CIoT member of the industry working group, told Accountancy Age.