Modernising and standardising company tax returns consultation

HMRC have launched a consultation, 'Modernising and standardising company tax returns'. It seeks feedback on the timeline for the new prescribed format for company tax returns and mechanisms ensuring compliance. 

Board meeting

Consultation

The government wants feedback on implementation timelines for the prescription of Corporation Tax computations, arrangements to ensure a smooth transition from the old rules, and proposals for proportionate enforcement mechanisms to ensure compliance. 

Additionally, the consultation addresses mandatory online filing in relation to company tax return amendments and invites opinions on any potential issues. 

The government has been working with software developers, advisers, professional bodies and other stakeholders to design and deliver the first phase of prescribed requirements for Corporation Tax computations. The intention is to move away from a flexible, non-standard format to a standardised, fully tagged format to reduce errors. 

The old format for company tax returns has evolved and created significant divergence in both presentation and the way XBRL tags are applied. 

  • In many cases, key information is omitted, presented ambiguously or set out with difficult-to-interpret formats. 
  • There are unclear expectations for taxpayers and agents on what constitutes a complete and correct return. 
    • This contributes to errors and unnecessary enquiries. 
  • The old format provides inconsistent data that requires manual intervention by HMRC and could distort HMRC's view of the Corporation Tax base. 

Implementation timescale

The government realises that transition to a standardised, fully tagged format will require software updates, which may be significant for some firms. The consultation is therefore seeking opinions on the timeline for implementing the new format.

The proposed approach is: 

  • April to September 2026; collaborative development and refinement of draft specifications. 
  • End of September 2026; publication of the final prescription. 
  • October 2026 to September 2027; build-and-test period. 
  • October 2027 to September 2028; live pilot period. 

Enforcement measures

The government is proposing enforcement measures for software developers who persist with non-compliance, and to protect those who do meet the required standards. 

The proposed enforcement options, which could be introduced individually or in combination, are:

  • Approved Corporation Tax Software Product List. 
  • Block submissions that do not meet software standards. 
  • Penalties for non-compliant software providers. 

Mandatory online filing of amended company tax returns

Currently, amendments may still be submitted via written correspondence for company tax returns. HMRC have stated that although 95% of amendments are submitted online, they continue to receive amendments in other formats. 

These can cause issues, including: 

  • Delays in processing claims or refunds due to HMRC having to manually process the amendments. 
  • Higher risk of errors due to manual processing. 
  • Lack of clarity on whether a letter is an amendment or not. 

The intention is to make online submission mandatory for amendments. The government is seeking opinions on whether there should be exemptions to mandatory online filing and whether the commencement of mandatory filing for amendments should commence later than 1 April 2027. 

Responses to the consultation should be made using an online form. The consultation will run for 12 weeks, ending on 2 June 2026. 

Useful guides on this topic

Company tax rates and allowances
What is the rate of Corporation Tax? How does marginal relief work? Which companies pay the main rate of Corporation Tax? Which companies pay the small profits rate of Corporation Tax? How do I calculate Corporation Tax? 

Calculating Corporation Tax & Checklist
How do you calculate Corporation Tax? What is the small profits rate? How do you calculate Marginal Tax relief? How do you adjust for Associated Companies? What is meant by Control? What are Augmented profits?

Company Tax registration checklist
New company tax registration checklist. When to register with HMRC.

Company Compliance checklist: Returns, filing & payments
A compliance basics end-of-the-year (and tax year) checklist for subscribers.

External link

Consultation:  Modernising and standardising company tax returns