A committee of MPs has found that take up of online services for filing company tax returns remains low, despite the incentive of cost savings to users and the government.
HM Revenue and Customs (HMRC) is planning to invest £340m in its online services between 2006 and 2015. As levels of online filing increase, it expects to save most of the £9m a year it currently costs to process paper returns.
Online filing can also save a typical business £20 on each company tax return and £5 on every VAT return, as well as reducing the rate of error.
Despite this, the MPs on the influential Public Accounts Committee say less than 10 per cent of businesses filed their VAT or company tax returns online in 2006—07 and that the technology does "not fully meet the needs of businesses for robust and secure online systems".
A report published by the committee on 4 December 2007 compares HMRC with tax authorities in other countries which provide specialist services and incentives for those who file online.
A business in the Netherlands, for example, can view an online statement of account across all the taxes and duties it pays. Other countries use additional incentives, such as quicker refunds for online returns, longer filing periods, pre-population of returns, and specialist services for companies and the public to access online facilities.
Plans to introduce mandatory online filing have been put back to 2010 for VAT and 2011 for company tax. The committee emphasised that, before resorting to compulsion, HMRC should offer "a good quality service which a high proportion of businesses are willing to use voluntarily".
Commenting on the report, committee chair Edward Leigh, said: "HMRC 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."
Leigh also said that far too many businesses are failing to pay taxes on time and called on HMRC to be much better informed about the types of businesses which tend to be late in filing and slow in paying up.
This article was originally published at Kablenet.
Kablenet's GC weekly is a free email newsletter covering the latest news and analysis of public sector technology. To register click here.