In an update to professional institutes, including CIOT and ICAEW, following a Virtual Communications Group (VCG) meeting on 28 July, HMRC said it was working with Companies House to develop a new, improved company tax return and company accounts filing service called Company Accounts and Tax Online (CATO).

HMRC says the new service will make it quicker and easier for companies to file their own annual accounts to Companies House and company tax returns to HMRC - at the same time or separately. Like the current HMRC free filing software, it is designed for unrepresented customers with straightforward affairs.

CATO is an online service which companies will access using their own filing credentials, unlike the existing HMRC free filing software, which uses a form downloaded from the internet.

HMRC points out that: ‘While most agents use commercial software to file company tax returns and annual accounts on behalf of their clients, we are aware that a number of agents use the current HMRC free filing software as there is no restriction on who can download the form. With the introduction of CATO agents will not be able to use this service on behalf of their clients.’

The tax authority says it understands that some agents are concerned about the withdrawal of the free HMRC software and the need in future to use commercial software to file company accounts and company tax returns on behalf of clients.

As a result, the current HMRC free software will continue to be available for accounting periods ending on or before 31 December 2015, and will remain available until 31 December 2016.

HMRC says this allows at least a year for those agents who use the HMRC product to make alternative arrangements as a return for accounting periods ending 31 December 2015 will not normally be due until 31 December 2016.

HMRC’s letter also states: ‘A variety of commercial software is available for professional users at a range of prices to suit different filing needs. For example, single use software is available for between £25 and £50 and unlimited use packages for under £250. (So an agent with 25 clients would need to add only £10 each to their bills to cover costs). Also some commercial software offers much greater functionality than the HMRC product to help agents manage their clients CT returns.’

HMRC notes: ‘The UK has a highly competitive software industry that has developed a variety of low cost products for agents. It would be wrong for HMRC to use public sector resources and expertise to release rival products.’

Both ICAS and CIOT have indicated that they have raised concerns with HMRC about this change, because the new service will not be available for use by agents. They are asking their members to get in touch if they will be adversely affected by restrictions to use of the new service.

More information on commercial software suppliers can be found on gov.uk with HMRC accepting returns filed using any of the products listed here

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