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CATO – Changing the landscape for Corporation Tax return filing

written by Editor, 8 February 2016

Guest blog by, Gary McCombe, Digita Product Specialist

Software

Ever since the introduction of iXBRL and mandatory Corporation Tax return filing, HMRC has provided a free, PDF based, product that could be used for the most basic situations.  The intention for this product was that it would be used by unrepresented companies to prepare their own tax returns.  It was never intended to be used by agents but due to the way that it worked, a number of agents used it on a regular, or exclusive, basis for preparing client filings.  Over the last year, 15% of CT600 returns were made using the HMRC product.


Just before the furore around Digital Tax Accounts began, HMRC introduced a new corporate filing service (Company Accounts and Tax Online – CATO) that you may not have heard much about as there was much less noise around the announcement.

CATO

CATO changes the landscape for Corporation Tax return filing by being designed for use by unrepresented companies only.  This change means that agents will not be able to use the system to file on behalf of their clients. The system was never intended to be used by agents and this change has made it more formal.  For those agents that do use the free software, they will be able to do so for all periods up to and including Accounting Periods Ending 31 December 2015.  As a result, the tool will be available until 31 December 2016 – the normal filing deadline for 31 December 2015 returns.

Once access is removed, one possible solution that has been suggested is for the agent to log in as the company itself.  However, we have heard that HMRC has told various agent meetings that it will be monitoring to see whether logins are being abused i.e. different company logins used from the same IP address. This may lead to action against agents circumventing the system or just the company being unable to access its service due to ‘suspicious activity’.

The alternative is for agents to buy commercial software to prepare these returns or to outsource the return preparation to an agent that already has software.  Digita Corporation Tax is a perfect fit for agents moving from the HMRC service as it will give them everything HMRC did and more.  With a success rate in the high 90% area, you can be confident that your obligations to your client will be met.

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