I recently tried to undertake the annual task of filing our charity trading subsidiary tax returns to HMRC. It appears the system has changed. I can no longer use the online service to file CT600 and iXBRL tagged accounts. It appears we need to use third party software to file very simple charity subsidiary accounts.
Following some further digging and consultation with CTG colleagues, I found that HMRC announced this time last year that they were withdrawing the free Adobe software they previously provided for filing corporation tax returns and company accounts at Companies House. The software was available for accounting periods ending on or before 31 December 2015 but was then withdrawn.
A “new and improved version” has been developed called Company Accounts and Tax Online (CATO) which, according to HMRC, makes it “quicker and easier for small companies to file their own annual accounts to Companies House and company tax returns to HMRC – at the same time or separately”.
Unfortunately, this is another example of HMRC imposing an electronic only filing system without providing the tools to do it. There also appears to be a lack of awareness about this change. HMRC has provided a list of commercial software and service suppliers that have provided evidence that they have developed software or manage a service (or both) that can produce one or more elements of a Company Tax Return.
We are weighing up the merits of different suppliers and I would welcome feedback in the comments section below from other charities on any experiences they have had with different providers.
I would encourage any charities intending to file tax returns to start looking at this as early as possible and to identify the necessary time and resources that will need to be allocated.
Another query that has been raised with me is whether PDFs can still be used to file accounts. HMRC guidance on the charity exemptions from filing state:
- Unincorporated charities, clubs and societies can choose to file their accounts in either iXBRL or Portable Document Format (PDF) but they must still file their return online and submit any computations in iXBRL format.
- We accept accounts from smaller charities in PDF format. This is because the accounting principles by which smaller charities prepare accounts mean that the accounts part of the HMRC free software may not be suitable for them. A ‘smaller charity’ for this purpose is one where, together with any wholly owned subsidiaries, that is companies owned by the charity, the combined income does not exceed £6.5 million for the accounting period.
- Any computation forming part of a charity’s company tax return must be in iXBRL format. However, no computation is required at all where the CT600E (Charities and Community Amateur Sports Clubs (CASCs)) supplementary page of the return is completed and confirms that all income and gains of the charity are exempt from tax and have been or will be applied for charitable purposes.
Justin Bevan is Gift Aid and Tax Manager at Oxfam and a member of the Charity Tax Group Management Committee