The benefits of filing tax documents online

Imagine you had a dream one night, where Her Majesty’s Revenue & Customs (HMRC) gave your business the opportunity to not only save time by filing information online, but it would actually pay you as well...

You’d wake up thinking it would be great, but would never happen, right? Well it HAS happened and there’s an opportunity for your business to get a little money back off the taxman.

Admittedly it’s not much. But add it to the other benefits of filing certain information online, and it becomes a no-brainer.

By filing online you buy yourself the maximum amount of time available before a deadline. And in a small business, time means money. You are guaranteed that the information has been received (rather than lost in the post), as you get a receipt for it. And there’s no chance that a data inputter will make a mistake, as you or your accountant puts the data in for you.

HMRC has declared it wants the majority of transactions with its “customers” – you and me – to be done online. Bytestart takes a look at what you can file online and where there’s cash to be made.

Employer’s annual return

In the 2007-2008 tax year, small businesses with employees can get £100 back by filing online before the due date of 19th May. And next year they can get £75. It’s free money, and it’s tax free! If you’d been doing this a few years ago, you’d have got £250 back.

HMRC will still give you the cash if your agent (bookkeeper or accountant) does your online filing for you.

There are a couple of rules – you must have under 50 employees, meet the quality of information needed, and actually have a requirement to make a return. That last rule was introduced after a few companies bent the rules a few years ago, claiming cash back by submitting an employer’s annual return they didn’t need to do.

Unfortunately, after the 2008-2009 tax year this benefit will be withdrawn. By then small businesses will join medium sized and large employers who have no choice whether or not to file online.

VAT

You can now register for VAT online as well as change information, submit your return and pay your bill. If you submit your information electronically, HMRC requires you to make payment electronically too, by Direct Debit or BACS.

It’s worth noting that with this and all other online filing, it can take a few days to initially get set up. Part of the security checks done by HMRC involve posting passwords or security codes out. So it’s worth getting your business set up online well before any deadlines.

Corporation tax

Your company tax return can also be done online. The system will work out your tax liability for you, and of course you can do it right up to the deadline without any penalty. You can also check payments made and how much tax your business owes.

Personal tax return

It’s also worth noting that you can also complete your personal tax return online. This gives you three months longer to do it than by submitting a paper return. The system works you through the information you need to give and calculates your tax liability for you. And HMRC promises any money owed is repaid faster.

While it’s not really recommended, you can leave it right up to the 31st January deadline, with no worries if the website crashes – if that happens HMRC is pretty good at extending deadlines.

Companies House

This is a separate organisation from HMRC, but it’s worth nothing that you can submit required information about your limited company to Companies House online. Their WebFiling system will save you £15 on your annual return, and allows you to submit other vital forms easy and free of charge.