A recent announcement made by the HMRC has indicated that from 1st April 2010, all traders with an annual turnover of £100,000 or more, existing companies exceeding £5.6 million per annum and new businesses (no matter what the income) will need to start filing VAT returns and making payments via a specialist online system.
It is expected in 2012 that the rule of filing online VAT returns will apply to all taxpayers but until then, anyone who doesn’t fall under the above categories can continue to submit paper based VAT returns.
The Public Accounts Committee (PAC) commented in a published report that following the filing system launch in 2001, not enough businesses are actually making use of the facilities readily available.
Chairman of the PAC, Edward Leigh spoke out about the entire online returns system: “HM Revenue & Customs must ensure its online services for VAT and company tax returns are not only sufficiently robust and secure, but also offer facilities which sell the idea of electronic communication and online filing to businesses. And the department must go further than it plans at present to lighten the administrative burdens associated with compliance”.
Using the online VAT return filing system
Some companies are already taking advantage of the online system and it is actually quite easy to use. Aside from this, there are other benefits that can make a difficult process a whole lot simpler.
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Completing a paper based VAT return can take time and if postal delays arise then this could result in a hefty fine for late filing. Using the online system can eradicate such problems.
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Human error is often a major factor when it comes to VAT returns in paper format and with the HMRC spending over £9m per year on processing returns; costs tend to rise in order to correct errors. With the online system, it will undertake automatic calculations that in turn will reduce the possibility of mistakes.
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Overall, the time spent completing all essential details online will be a lot less and with help every step of the way, it couldn’t be easier.
Fact: In the PAC report, they estimated that when all VAT returns are filed online, this could save a large percentage of the £9m per year it costs to process paper based documents. They indicated that it costs roughly £5 per business to receive and check through all sections of the relevant forms.
If you have not yet registered for the service then this can be done by clicking on the link below:
https://customs.hmrc.gov.uk/SecurityWebApp/?_nfpb=true&_pageLabel=httpsslPageMySite_MyServices
Signing up for an account is quick and easy and consists of several simple steps:
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First you will need to agree to the terms and conditions. Read these carefully before proceeding
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An up to date email address will be required and you will be asked for your name
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Choose a password that is personal and easy to remember but not one that can be guessed by others
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At this stage, you will be given a user ID. Write this down and memorise it or keep it to hand in a secure place
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The final step is to complete all necessary information regarding you and details relating to your VAT registration status
Is the system secure?
One concern for a large majority of internet users is whether or not a particular website will be secure. It is important to be cautious, especially when it comes to posting extremely personal details which if they fell into the wrong hands, could result in serious consequences.
The HMRC has spent a lot of time and money ensuring that the system is 100% safe and users can expect the following:
1. Messages can be sent and received via a secure server which can only be viewed by you
2. Unlike with paper VAT returns, you can be certain a return filed online is received because the individual will immediately receive confirmation of receipt along with a unique reference number should any queries or problems arise.
Conclusion
There have been concerns raised about the use of an online system to file VAT returns but with the HMRC working to guarantee a safe and easy to use operation, using the internet has never been better.
With the mandatory laws soon coming into place, I would recommend registering now and seeing how much of a difference an online method can help.
1st Contact Tax offers specialist tax services to contracting professionals these services include: Contractor Accounting, Contractor Umbrella payroll, Personal Tax for Contractors, Limited Companies for Contractors and Contractor Financial Advice.