TAX BODIES HAVE criticised the Treasury’s decision yesterday to ignore pleas for a delay in the implementation of new technology for making tax returns.
Treasury minister David Gauke yesterday revealed he would not postpone the mandatory use of the computer language iXBRL beyond 1 April. A coalition of tax bodies had written a joint letter asking for a delay.
Companies are due to use iXBRL to make their corporate tax returns from 1 April.
HM Revenue & Customs had already signalled its intention to push ahead with the deadline. Companies have been aware of the iXBRL deadline for five years.
Anthony Thomas, deputy president of the Chartered Institute of Taxation, said: “This decision will come as a blow to some businesses and members of the professional bodies who are struggling with implementation due to the insufficiency of time between software arriving, and the legislation commencing on 1 April 2011.”
Concerns were raised after it was revealed by Accountancy Age that one of the largest software suppliers, Sage, would not have its full iXBRL technology in place for the deadline.
However, Gauke said there would be a ‘soft landing’ for implementation of iXBRL with HMRC taking a “sympathetic” approach to any difficulties caused by a lack of familiarity with the new technology, and the software needed to manage it.
Donald Drysdale, assistant director of tax at ICAS, added tax advisers could be left picking up the costs regardless of the soft landing.
“Most of them must rely on commercial software vendors, some of whom have failed to deliver their accounts preparation solutions in time.”
Other packages failed to offer the level of automation advisers anticipated resulting in staffing having to manually work on the data, he added.
“He [Gauke] has expressed the wish that any transitional issues should be managed effectively, emphasising that no-one who has made a reasonable effort to comply will be penalised and that anyone with real difficulties should contact HMRC. This is far from ideal, given that contacting HMRC can be an almost impossible task at the best of times,” said Drysdale.
HMRC told the institutes it will provide a dedicated email address for tax filers to contact them should they have any problems.
However, Chas Roy-Chowdhury, ACCA’s head of tax, believes HMRC may already be under-resourced and there is no information on how long HMRC will take to respond to a query adding more time and cost to a tax return.
He hopes the taxman will respond in realtime and there won’t be delays, however he is concerned the industry may be in for a “bumpy ride”.
Chairman of the tax faculty technical committee at the ICAEW, Paul Aplin said: “What agents and companies now need is the clearest possible guidance from HMRC… and a clear and unambiguous statement from Companies House on their intentions for mandatory e-filing in 2013.”
HMRC yesterday published guidance on it plans to deal with “difficulties” users may face.
Simon Braidley, president of the ATT, said: “The professional bodies will be doing all we can to monitor the situation and raising with HMRC any new issues which come to light. To enable us to do this we urge members to report to us any issues they face.”
A spokesman for the taxman said: “HMRC’s soft landing guidance, which will be in place for 2 years, confirms that any difficulties with filing in iXBRL will be treated sympathetically and that no-one will be penalised if they have taken reasonable steps to comply.
“iXBRL is a new requirement and HMRC are not in the business of rejecting returns or raising penalties whilst customers get to grips with this.”
Gauke said in his response letter to the institutes: “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.”
The six institutes that sent a letter to Gauke requesting a delay were; ICAEW, ACCA, ICAS, CIoT, ATT, AAT.
HMRC is continuing to ramp up the number of raids on premises it carries out as part of criminal investigations, searching 761 properties in the last year
Lord Howard Leigh of Hurley discusses the government’s initiatives to mitigate tax avoidance and evasion
Top 50+50: Demand for tax advisory services remains high, but fee pressure is expected in relation to compliance services
The demand for tax advisory services remains high and this looks to continue; but fee pressure is expected in relation to compliance services as the “Making Tax Digital” initiative is rolled out,
While some resistance to change is to be expected, the degree of controversy surrounding HMRC's Making Tax Digital proposals has surprised the government