Friday, March 11, 2011

BLOG 102


The main accountancy bodies have asked the government to defer the compulsory filing with HMRC of accounts and tax computations using iXBRL, which is due to come into effect from 1 April this year. The government has refused.

That probably means very little to most readers. I should therefore explain what the row (albeit the professional bodies would probably recoil at my describing this as a row) is all about.

In 2005 the then government asked Lord Carter of Coles to look at electronic filing of tax returns. Lord Carter recommended that this should become compulsory (subject for a minor exception) for all companies from 1 April this year. However he added a very important proviso that it should be compulsory only if HMRC were sufficiently advanced by that time that the software could cope with it.

The row hinges on that proviso. HMRC say that their software is robust and can cope with it. However they were tardy in getting to the stage where they could provide to software houses the specification that the commercial software that most accountants use needs to meet.

David Gauke, the government Minister responsible for HMRC, in rebuffing the professional bodies, said that his understanding is that all of the software houses bar one can meet the 1 April date, and that one has promised to have an interim solution in place by 1 April.

No problem then? Well, my understanding is that the one is Sage. If you have never heard of Sage, imagine the government saying that all internet search engines have to identify on screen contract details for the owners of the website that one enters, and that everyone can do it other than Google. I suspect that most people would say that the whole thing is a waste of time without Google.

Well, Sage is the Google of tax software! It is ridiculous for anyone to suggest that there is a robust system for electronic delivery of corporation tax returns if Sage are not on board.

Yes, Sage have an interim solution. But what is an interim solution? I suspect that it is something that can cope with the simple 80% of returns but cannot deal properly with the other 20%. I should stress that the other 20% are not necessarily major companies with complicated affairs. Most of them are likely to be tiny companies that happen to have entered into a one-off transaction which is a bit out of the ordinary.

Lord Carter was of course an advisor to Gordon Brown at the time of his report. Gordon asked him to implement his recommendations, which he accepted in full. I do not know whether George Osborne asked Lord Carter to continue with the task. I think that David Gauke’s response to the accountancy bodies put up two fingers to the integrity of Lord Carter. If George Osborne sacked Lord Carter, I am surprised that he has not publicly protested the decision not to delay compulsory e-filing until the electronic world is able to cope with it. If Lord Carter is still the government’s guru for electronic tax filing, I am shocked that he has not publicly protested this decision, as I think it utterly undermines the cornerstone of his recommendations.



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