Companies will have to file all VAT returns online under draft legislation from the UK tax authorities.
HM Revenue & Customs' proposal, released last week, recommends compulsory requirements for businesses to file their VAT returns online and to make payments electronically.
The rules would apply to existing businesses with an annual turnover of £100,000 ($145,000) or more for the accounting periods starting on or after April 1 2010.
Businesses have been able to file returns online for nearly eight years. The 2010 date to make electronic filing compulsory was flagged some time ago. However, many organisations are hesitant to file all returns online because of concerns about HMRC's systems.
Lynne Clare, strategic VAT director at Sony, said hiccups with the online system are part of the reason her company still files some paper returns.
"If we are going to be forced to go online they need to make the systems more robust," Clare said. "When the filing has been received ok we need evidence of that. We need certainty," she said.
HMRC's document has tried to reassure taxpayers that systems have been amended but Peter Mendham, a consultant at the law firm Allen & Overy, said more needs to be done to ensure that anyone encountering problems will not be disadvantaged. "Businesses need comfort that there will be evidence showing when the system was down," he said. "There could be a failure at the sender's end."
The new system would also mean practical changes for businesses.
At the moment 14% of all VAT returns are filed online. "Getting the figure to 100% in a short space of time will be hard," said Mendham.
The tax authorities, however, are confident their systems are reliable.
"The existing VAT online system has been fully tested and we are confident that it has sufficient capacity to handle the number of online returns expected. An enhanced VAT online system is due to be launched later this year. The new system is being scaled to manage post-mandation volumetrics and will be fully tested before its release," an HMRC spokesperson said.
