Issues with Free Corporation Tax Filing

HMRC software not all singing and dancing

From 17th April 2017, HMRC’s free PDF-based Corporation Tax (C.T) return software was replaced with a new online service that can only be used by unrepresented companies, clubs and charities with straightforward tax affairs. Only C.T returns for accounting periods ending on or before 31st December 2015 could be filed using the old software but not for later accounting periods.

The free filing service can be used to file:

• C.T return and supplementary pages
• statutory company accounts
• C.T computations
• other attachments (in PDF format) to support the C.T return
• accounts to Companies House at the same time

Who can’t use the service?

There is a list of companies that are prevented from using the free service but those that affect contractors are:

• company turnover in excess of £632,000 p.a
• company in liquidation or receivership
• company is an investment company
• need to claim a refund of tax following the repayment of an overdrawn director’s loan account, more than nine months after the end of the accounting period

However, there are also a number of accounting and computational issues that can also prevent a freelancer using the service. HMRC list a number of items that their free service will not entertain, the main ones likely to affect contractors being:

Accounts

• called up share capital not paid
• income or expenditure from investment assets
• adjustments for something reported in a previous year

Computations

• gross income from property that exceeds £5,200
• income that exceeds £1,000 which doesn’t come from the PSC’s main trade
• chargeable gains or losses
• non-trading income except interest received
• leased cars

The full criteria of those who can and cannot use the service can be found here.

Current problems

HMRC are aware that taxpayers are not receiving a final confirmation that their C.T returns have been successfully submitted. Whilst they will be able to see an on-screen acknowledgment (‘Submission successful’ or ‘Submitted’) during online filing, this doesn’t confirm the final status. HMRC therefore advise individuals to login to the service again and check the dashboard to establish the submission outcome, which will either be ‘Submission error’ or ‘Submission complete’, ie successful. Submissions can be tracked anytime within 30 days of filing.

Will this be enough for HMRC to counter any reasonable excuse appeal in the event that a C.T return is filed late as a result of the uncertainty created by the online service?

There are a host of balance sheet error messages that the service throws up and which HMRC propose solutions to which can be viewed here.