UK business to embrace electronic filing – by law

How do you get people to embrace e-government? Easy-peasy, you make it compulsory. The Guardian has spotted a clause tacked on to the end of the government's finance bill which is intended to do that very thing, levying a fine of up to £3,000 on businesses who don't file their tax returns electronically.

Perplexingly, the Graun's electronic version of the story is different from the paper one, and is written by an entirely different person, an unfortunate side-effect of this being that you miss the hilarious suggestion by the Treasury spokeswoman that you could always file your returns from a library or an internet cafe. This security-conscious tip is sadly only available in the dead tree edition.

There appear to be two deadlines for switching to electronic filing. Larger companies will have to make the move earlier, probably around 2006, smaller firms will have until 2010, by which time we suppose the UK Government Gateway might even support a sufficiently broad range of digital certificates for Mac and Linux users to be able to use the electronic filing service in the first place.

The Inland Revenue, in common with everbody else, is supposed to have all its services online by the end of 2005, and has a target of 50 per cent take-up by that point. The introduction of the big stick in 2006 would therefore have a certain stalinist utility to it.

But a National Audit Office report published earlier this year (e-Revenue) described this as ambitious and, "based on progress so far and experience elsewhere... unlikely to be achieved." The report noted that 660 businesses had made enquiries about electronic filing, and 49 had taken it up. This is nowhere near as dismal as it sounds, because they include payroll bureaux representing 5,000 companies, so a total of 6 million employees is now covered.

Take-up of the self assessment internet service has however been awful. 39,500 used it for tax year 1999-2000, against a target of 315,000, and as of 4th January just over 50,000 had filed for 2000-2001, which doesn't look hopeful for the target of 200,000. Note also that as many accounting firms will be filing electronically on behalf of individuals, these numbers are probably worse than they look. But threatening to fine everybody, not just businesses, is probably unacceptable. ®