Taxation - Soft option for taxpayers?

Microsoft last week unveiled its first tax product, TaxSaver 99, which could become a key stepping-stone on the path to online filing of personal self-assessment tax returns.

Developed with Digita, the Exmouth-based personal taxation software specialist, Microsoft TaxSaver will ship at the end of June and be sold as a rival to packages like the Consumer Association’s Which? TaxCalc.

Although it is strictly a consumer-only package, TaxSaver will send a shockwave through the tax world as the US giant is likely to play an increasingly active role in UK tax affairs.

Peter Mart, managing director of CSM, had a relaxed response to the Microsoft-Digita tie-up. He saw it as making software available to consumers that would then be compatible with accounts software besides Digita’s Taxability Pro. ‘I don’t believe Microsoft is interested in vertical markets like accountancy,’ he said.

But TaxSaver could signpost important developments on the horizon. Microsoft, Digita and their tax adviser KPMG are closely involved with the Inland Revenue on electronic lodgement via the Web. The partners showed a prototype system at the Revenue’s 200th anniversary of income tax party last year and the chancellor trailed online filing in his Budget speech, as part of the government’s promise to conduct 25% of its business electronically by 2002.

Digita managing director Jeremy Rihll would not be drawn on the technical details, but the program also features a new Explorer-style user interface that reflects the growing convergence of Microsoft’s application families.

The program leads the user through self-assessment with questions about their employment, investment and pensions.

Mark Lee, a tax partner at BDO Stoy Hayward, predicted users of the package would struggle to handle the complexity of personal self-assessment. ‘Our tax system is so complex. This means that either entries in the tax return will be wrong or the questions asked in the form will be complex and a turn-off.’