From 1st April 2010, HM Revenue & Customs are changing the rules surrounding VAT Returns for VAT registered businesses and if you are not already filing online; it could affect you.
As part of HMRC’s plans to scrap the paper return in exchange for an electronic system, they will be making it mandatory for all businesses with an annual VAT exclusive turnover of £100,000 and all newly VAT registered businesses (regardless of their turnover) to submit their returns online. For all other existing VAT registered businesses with a turnover below £100,000 electronic filing will remain optional.
There are numerous messages coming from HMRC about how this is a positive change and as long as your accounting practices are all in order; it’s difficult to see how it couldn’t be positive, especially as more and more accounting software packages will should start to include automatic VAT return filing features – saving you even more time and effort.
Even without your own automated software the maths should much simpler online as the system calculates totals for you, reducing human error; the payment should be simpler as all the affected companies will have to pay online; the submission should be more secure and the system should, apparently, be more reliable.
But what happens if it isn’t reliable? It will be interesting to see how HMRC staff cope in a crisis when they experience ‘technical issues’ although we must remember they have past experience of crisis management, when returns are lost in the post and taxpayers details on CDs are ‘misplaced’ – not to worry you at all.
Much more information about the changes and the features of the new system can be found at www.hmrc.gov.uk/vat. Even if you do not fall into the category of businesses that will have to file online, we suggest you still take a look and strongly consider attempting to file online – the benefits really do seem to outweigh the disadvantages, plus it may also become unavoidable at some point, as your turnover grows or when the rules change again.