2006 Pre-Budget Report Summary

• Personal tax

• Employment issues

• Corporate & Business Tax

• Capital taxes

• VAT

• Environmental Measures

• Other Matters

Online filing 

Lord Carter’s review of HMRC online filing services was published earlier in 2006. Legislation will be brought forward during 2007 to implement the changes which will start in 2008.

The key proposals are to:

• require businesses to file their VAT returns, company tax returns and PAYE in-year forms online in phases from April 2008

• introduce new filing deadlines for income tax self assessment returns of 31 October for paper forms from 2008 but retain 31 January for online returns 

• promote online filing by tax agents and better quality data by withdrawing computer generated paper ‘substitute’ self assessment returns from 2007/08.

Company filing dates

Following Lord Carter’s recommendations and consultation by HMRC and Companies House, the government will work to provide a single online filing facility by 2010. To encourage earlier filing and give businesses certainty sooner, from 2008 the period during which an enquiry can be opened into a corporation tax return will be tied, for most companies, to the actual date HMRC receives the return rather than a fixed filing date.

Review of HMRC powers, deterrents and safeguards

The government launched a review of HMRC powers and taxpayer safeguards in March 2005 to provide tools for the newly integrated HMRC. In March 2006 HMRC launched its second consultation on the general principles of reform and in August more detailed consultation on modernising criminal investigation powers. 

A summary of the responses to the March consultation has now been published. The comments are generally supportive of the broad approach proposed. A detailed consultation on penalties for incorrect returns and a further consultation on criminal powers will be published in the near future.

Varney Review – review of links with large businesses

The findings of the review carried out by Sir David Varney were published in November 2006 and the government has confirmed that it has accepted all its findings.

The review’s proposals will provide:

• business with greater certainty about the tax treatment of transactions by providing a system of advance rulings for significant transactions

• more efficient resolution of tax issues

• a more cost effective approach to administering tax affairs based on an efficient risk-based audit approach.
  

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