The Communications Workers Union has announced to Royal Mail their intention to hold two national strikes this week on 22 and 23 October, and further industrial action has not been ruled out. This is likely to affect delivery of paper tax returns to HMRC, which are due by 31^st October.  HMRC are aware of this and have advised contractors to be aware that;

1)      It’s your responsibility to make sure that your return is received on time. For paper returns the deadline is Saturday 31st October.

2)      You should consider filing online as you’ll have longer to file your tax return – until 31st January 2010.

3)      If you want to send your return on paper you can deliver it by hand to your nearest HMRC Office instead of posting it.

4)      If you deliver your tax return by hand on Monday 2 November, normal arrangements will apply and you won’t have to pay a late filing penalty.

5)      If you still decide to post your return, send it to your tax office as soon as possible.

6)      You won’t have to pay a penalty if you missed the deadline because of the postal strike – but you’ll need to be able to prove that you posted your return before 31 October.

Agents are advised to file their customers’ tax returns online. If they do want to send them on paper they should either post them as soon as possible or take them to their nearest HMRC Office.

To prepare and submit your Tax Return online you need to register for an online account. HMRC will then send you an activation code within 7 days so you can activate your account. Your tax liability will be calculated for you, and the chances of discrepancies are therefore lower than using the paper return.

For more information on the self assessment process, visit HMRC.

The changes mean small businesses including contractors and freelancers need to file all tax returns online after the end of March 2011, for accounting periods ending after 31 March 2010. From April, 2011, all Corporation Tax returns must be filed online in XML and the accounts in a specified data format (known as Inline XBRL or iXBRL). In a bid to help firms familiarise themselves with the new portal which will be used to file the tax returns, HMRC are hoping to release Corporation Tax Software by the end of the year.

A leaflet detailing these changes is being sent to half a million companies and tax agents. Companies will be able to file online either through commercially available software or by using HMRC’s own Corporation Tax filing software, which is aimed at companies with less complex tax affairs. Director of HMRC’s Carter Programme Mark Holden remarked: “We’re working closely with software developers, and a number of commercial products will be available to support the iExtensible Business Reporting Language standard from November 2009, with more to follow.”

As the leaflet explains, there is no need for companies to re-engineer their accounting processes to comply with the requirement to file online using iXBRL, as either HMRC’s Corporation Tax filing software or their commercial software will do this for them.

Many thanks to Alison@Keytime who also added that from 2011, there will be a joint filing initiative between Companies House and HMRC.

If you would like support running your own limited company call ICS free on 0800 195 3750.