The target of 25% of transactions with government being done electronically by 2002 is looking somewhat more achievable with the announcement that VAT and income tax returns can soon be made via the Internet. The Finance Bill will allow Customs and Excise and the Inland Revenue to develop new electronic services that taxpayers can use as an alternative to the current legal requirement of paper returns.
Customs and Excise plans for electronic VAT Returns are already well advanced, with a live pilot during 1999-2000 and an expansion of the service in 2000-01. The Inland Revenue will be developing the new Internet-based services alongside their existing electronic services. The Electronic Lodgement Service is already used by agents to file their clients’ Self Assessment Returns. One of the first new services to be offered will allow taxpayers to file their own Self Assessment Returns and this is likely to be available in 2000-01.
Until recently the Internet was not regarded as sufficiently private and secure for the communication of tax information, partly because the information is transmitted over an open network and partly because of the need to validate the identity of both recipient and sender. This is no longer the case as encryption is available to secure the information being transmitted, and encrypted digital signatures can authenticate that information.