Companies at sea on DIY tax scheme

BUSINESSES are in danger of not being sufficiently prepared for the Pay and File corporation taxation system due to come into effect later this year, writes Roger Trapp.

The change aims to do away with the 400,000 estimated assessments made by the Inland Revenue. With the system applying to all accounting periods ending on or after 1 October, the Revenue has published a guide to how it will operate and is issuing an explanatory leaflet to companies.

Companies will need to file computations of their taxable profits within a strict time-scale and pay corporation tax based on self-assessment.

Price Waterhouse has launched a slim guide called Pay and File: It's Nearer than You Think. It highlights the regime's key features and makes suggestions for preparing the required computations. John Whiting, tax partner at the firm, said: 'A lot of companies are clearly not prepared for the new Pay and File system. Businesses need to ensure they have systems in place capable of producing up-to-date corporate tax data accurately and within the time-scales - or they could be liable for substantial penalties.'

Fellow accounting firm Ernst & Young has produced a more comprehensive book with publishers Kogan Page. 'With such a fundamental change, companies will need to review their systems to ensure they will be able to meet the tighter timetables,' said Charles Watt, tax partner at Ernst & Young. He is also co-author of Pay & File, the Ernst & Young guide to the new corporation tax regime.

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