Blog Article

Electronically Filing Accounts – Part 1

By Sam Thomas

Author

By Sam Thomas

Author

See full bio

Updated 12th July 2022 | 5 min read Published 20th February 2018

HMRC have released a new version of their Self-Assessment Exclusions for individuals. These are a list of scenarios that the HMRC system cannot cope with or will not calculate the correct tax liability for and therefore there is an exclusion in place to allow for these returns to be submitted by post instead of online.

HMRC have advised us that all Self-Assessment taxpayers need to file their 2016/17 Tax Return, pay their balance and make their first payment on account for 2017/18 by 31 January 2018.

They have confirmed that a “small number” of taxpayers are affected by the exclusions and therefore unable to file online or get an accurate income tax liability calculation for 2016/17. Their forecasts suggest that the exclusions for 2016/17 will only impact “a very small proportion of SA customers (a fraction of 1%)”.

In these instances taxpayers (or their agents) should:

• File a paper return, along with a completed reasonable excuse claim

• Make a reasonable effort to estimate the income tax liability based on the information they have

• Pay the estimated balance for 2016/17 and make their first payment on account of 2017/18 by 31 January 2018

Should the tax liability calculation for 2016/17 be too low or the deadline of 31 January 2018 be missed because of an exclusion, HMRC will not apply late filing, late payment penalties and/or interest. Automatic issue of these can be cancelled by a reasonable excuse claim.

From February 2018 HMRC will contact “customers” and their agents where they feel that the tax calculation needs to be corrected to confirm their actual income tax liability.

If you are uncertain as to whether or not your client’s circumstances match an HMRC exclusion and IRIS allows you to submit your client’s tax return online you should still file the return online, and pay the tax liability due.

HMRC have stated that they will:

• Identify any cases filed online where the calculation is incorrect

• Make any required correction to the income tax liability

• Inform the customer of the correct liability

• Advise when the revised amounts need to be paid

• Inform the customer that they will not have to pay late payment penalties and/or interest attributable to any additional amount arising from the correction if it is paid before the revised due date

In most cases, if your client’s circumstances fall into one of the HMRC Exclusions the IRIS software will warn you and advise that the Return be sent by post. There are some scenarios, only recently highlighted by HMRC that the software will not warn you about, but the Return will be rejected online with a 6492 error. In these circumstances the return should be sent by post accompanied by a reasonable excuse claim..

Electronically Filing Accounts – Part 1

With nearly 4 million companies and a further 60,000 + LLPs in the United Kingdom preparing and filing financial statements for submission to Companies House every year, the benefits of filing these documents electronically far outweigh any reason for posting them on paper.

99% of Confirmation Statements are submitted electronically now, since it is £27 less than filing on paper. However, with no direct financial incentive electronically submitted accounts are lagging behind at only 75%, we take a look at why you should be considering filing accounts electronically:

Benefits of filing online:

Security – submitting accounts via the Companies House gateway is very secure and the documents are near impossible to fall into the wrong hands. Paper accounts are handled manually allowing for them to be misplaced, damaged/destroyed or even worse tampered with, some may not even make it to the final destination.
Faster = less penalties. Once submitted electronically the documents go through the automatic systems at Companies House, meaning any obvious mistakes are spotted quickly and the accounts are rejected, allowing corrections to be made before resubmitting, this can all happen on the same day. For the year 2016/17 Companies House issued nearly £92 million in late filing penalties for financial statements that did not arrive on time.
Acknowledgement and confirmation of acceptance - Instead of waiting for the document to go through the postal system and then the postal room at Companies House, before a paper acknowledgement is sent back, accounts can be submitted and accepted on the same day.
Rejection rates for online filing are lower than paper – due to the checks performed as you press the submit button, accounts filed electronically are much less likely to be rejected than paper accounts. For the year 2016/17 the rejection rate for paper filing was nearly 7% compared to just over 2% for electronically submitted accounts.
Covering letters are not required, simply submit the accounts from your final accounts preparation software.
Save money by not having to pay postage costs, paper and ink costs are reduced along with the need to have a stash of envelopes available.
No more walks in the cold and wet to the post box!

There is no reason not to file accounts electronically.

IRIS and PTP Accounts Production

Here at IRIS we have been very keen to allow our users the ability to file accounts electronically to Companies House introducing the feature many years ago, enhancing with further types of accounts as and when allowed by Companies House.

Nearly all types of limited company and LLP financial statements can be filed electronically using Accounts Production, with Charity accounts being accepted electronically in the Spring time.

Get an account:

To file direct to Companies House, you will need a presenter account. If filing Companies House forms, please setup a credit account, if you will only be filing accounts, an account ‘without a fee’ will be sufficient: Apply for online filing account

In Part 2 we’ll describe what you need to check and how to go about using software to file accounts electronically

Look out for our e-filing accounts webinar in mid-March which will explain how to e-file accounts to Companies House, which accounts can be e-filed and what is coming in our Spring release. More details to follow.