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File On-line and save money Nobody likes paying their tax, so when there is an opportunity to get something back from HM Revenue and Customs (HMRC) – the new name for the Inland Revenue) – we tent to leap at it. In this case there are additional reasons for ‘biting the taxman’s hand off’ in terms of cost savings. 
The government is keen to encourage maximum use of modern technology because – despite well publicised problems with many of its ‘headline’ systems – getting us to fill in forms for them saves them money in the longer term. They do not have to employ people to input data and the programmes should be self validating, so that errors are easily traceable. At least, that is the theory.So HMRC is asking – well actually telling – everyone to file certain returns on-line. For some companies, this is already mandatory; but for others – those with up to 49 employees – there is a window during which online filing is voluntary and in order to encourage us to move over quickly, there are some cash incentives. Of which more later. 'Online filing' means sending information direct to HMRC’s computer, cutting out paper and by May 2006, employers with more than 50 staff will have no choice but to submit their end of year returns (P14 and P35 data) online. There are some very good business reasons why you might wish to start online filing early – quite apart from the cash incentive – because sending or receiving information any information online is generally both secure and rapid. It can cut down on postage and administration time, as well as saving several tropical rain forests. But the main benefit must be to employers who are able to devote less time to unnecessary duplication of effort. After all once a piece of data has been input, it is usually a relatively simple job to ‘cut and paste’ it into another format, even if the cost of developing automatic ways of moving the data across is not justified. This means that some administration functions can be reduced or cut out altogether, thus releasing resources to make a more positive contribution towards the profitability of the business. In other words, it can help you run your business more efficiently. The forms that can be filed online include P11Ds (returns of expenses and benefits) and P46s (notices of new employees). But it is also possible to get tax coding and Tax Credit information online. And because data passes between computers without manual intervention, there is less chance of mistakes being made (at both ends) which should save time on follow-up enquiries. And now for the cash incentives. Employers with fewer than 50 employees can receive up to £575 tax-free from HM Revenue and Customs over four years simply by filing end-of-year returns online 
earlier than the mandatory dates:
Online filing can be achieved through most payroll software products or using Electronic Data Interchange software. It can be done by the company itself or an intermediary, such as an accountant or payroll bureau. Importantly, online filing does not include magnetic media (magnetic tapes, open reel tape, CD-ROMs and cartridges) which are currently used by some larger companies and bureaux. Small employers who do not already use payroll software can access HMRC’s free Online Return and Forms - PAYE service, which lets them fill in forms P14 and P35 on-screen and transmit them online, although this does not work out PAYE deductions. If you require any further information about the services that we provide or would like to review your financial planning position, please contact us |