HMRC has announced the closure of its Company Accounts and Tax Online filing service, which since its introduction in 2011 has allowed businesses to file annual accounts and company tax returns directly online.
Whilst this approach included a cost saving from direct filings without an accountant oversight, it has always come at the risk of incorrectly filed documents or unutilised allowances and reliefs. From 1st April 2026 companies will no longer have this option and will have to use commercial software such as Xero to carry out such filings without any third-party assistance.
HMRC says that the service, which is primarily aimed at small, unrepresented businesses with simple tax affairs, no longer meets ‘modern digital standards’, as well as not being compatible with recent changes to UK company law.
It is clear that some businesses have struggled with the system in recent years, with instances of incorrect information being filed either through human error or a lack of full understanding of the legislation and systems. Using commercial software will help to reduce such errors.
With just a year to go before the service is switched off, it is important that those currently using it start planning for how they will file their annual accounts and company tax returns. The best advice is to:
1. Migrate to cloud accounting software sooner rather than later,
2. Download the last three years’ filed returns from the HMRC website,
3. Speak to an accountant if you have any concerns or to obtain a quote for services.
The HMRC announcement makes it more important than ever to choose a commercial software package which allows direct filing to HMRC, as not all of those on the market currently offer this facility. The current list is here Find software for filing company accounts - GOV.UK
Although using commercial accounting software does involve an ongoing cost, this nominal amount should be balanced against the management time saved and the ability to ensure filing is carried out more accurately, without the need to go back and amend returns. Taking this one step further, using an accountant not only gives you the benefits above, but also allows you to get business advice, tax planning and assistance on all of your business and personal tax affairs.