UK plc could be forced to give VAT inspectors remote access to their computer accounting systems, a decision that could force companies to hold masses of electronic data constantly ‘open’ to inspection and place systems at further risk of security breaches.
Speaking at the Accountancy Age-sponsored Softworld exhibition, officials said that Customs wanted to be able to access company accounting systems remotely so it could examine important data.
Maitland Kalton, senior partner at technology law firm Kaltons, warned that Customs risked opening up confidential information to the public domain.
‘It could raise data protection issues. Customs would be liable if the information gets out or it causes a system crash. One would hope that they do their homework and testing,’ said Kalton.
Dave Turner, a director at business software provider Coda, said that giving VAT inspectors instant access to data would cause difficulties in terms of data storage and the cost of making the necessary changes to IT systems.
‘We currently have clients who set up their auditors with a local terminal and show them how to access its accounting information. That’s a world away from a VAT inspector accessing Abbey’s accounting systems from their own desk,’ said Turner.
The taxman also wants large companies to store at least six years’ worth of financial records in electronic form for interrogation. Paper documents will no longer be acceptable for VAT inspections.
The data will have to be stored in a new standard electronic format known as SAF-T (Standard Audit File).
A Customs spokeswoman admitted that businesses would have to meet some of the costs associated with developing the standard audit file, but in turn the SAF-T ‘aims to save time and money’.
Customs is also expected to make an embarrassing u-turn on a plan to introduce a tax software ‘kitemark’. The VAT man will instead piggyback on the ICAEW’s own scheme.
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