Outstanding tax returns cost Government billions

HM Revenue and Customs (HMRC) has failed to collect around one and a half billion pounds worth of business taxes, it has been revealed this week.

A recent report from the Commons public accounts committee has called for HMRC to ‘get a grip’ on the problem, in addition to tackling the low take-up of e-filing.

Around 20% of company tax returns and 15% of VAT returns are not filed on time, costing the Government billions.

The online filing system for tax returns was introduced in 2001 with a view to reducing the £9m HMRC spends on dealing with paper returns every year. However, HMRC is expected to fall short of its target of getting 50% of VAT returns filed by 2007/08.

Committee chairman Edward Leigh said: ‘HMRC must ensure its online services for VAT and company tax returns are not only sufficiently robust and secure - but also offer facilities which sell the idea of electronic communication and online filing to businesses.’

A new penalty regime for incorrect tax returns is due to come into effect in 2009. The scheme will cover returns for income tax, capital gains tax, corporation tax, PAYE, national insurance contributions, VAT and deductions under the construction industry scheme.

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