All VAT returns to be online from 2012

Online filing of VAT returns will be compulsory for all businesses from April 1, 2012, government officials have told accountants ahead of formally announcing the policy.

Following the smooth-running introduction of mandatory e-filing for VAT-registered firms with turnover over £100,000, ministers now want firms below that threshold to be included.

Under the current e-filing initiative, covering returns up to July 31, failure to settle VAT online incurs a penalty, apart from for those taxpayers who have a "conscientious objection to using a computer."

These individuals should also be excluded from the incoming requirement on all taxable persons to electronically file VAT returns from 2012, according to the influential tax body the CIOT.

An exemption from the requirement should, likewise, be extended to "people who have disabilities that make it difficult, if not impossible, to use a computer," the body said.

To inform a meeting of the group's tax experts, the CIOT invited small businesses owners who do not use accountants to come forward about any problems when electronically filing tax returns.

Small businesses that have experienced service issues, such as hmrc.gov.uk being unresponsive for long periods, should indicate whether the HM Revenue & Customs helpline solved them swiftly.

Seeming to reserve judgement about forcing all taxpayers to settle VAT online, the CIOT said it wanted to know the implementation costs of those firms already required to file tax returns online.

Directing answers to a dedicated email account , it also asked: "Have any businesses had to appoint agents where they had not done so before because the owner/proprietor/partners could not cope with online filing?"

So far, the CIOT understands that the transition for affected firms "has gone smoothly," but it said the Revenue should now "learn" from its experiences, in order to "more effectively" support VAT payers.