The UK’s tax authority (HMRC) should include open source options in its list of software suppliers for sending VAT (sales tax) returns and income tax updates, says Flax & Teal, a Belfast-based software development and data analytics company. HMRC is gradually adding new suppliers to the list, but so far has not included any open source options.
The UK wants to make digital VAT filings mandatory in April next year for all businesses with a turnover of over GBP 85,000/y (about EUR 95,000).
“Being able to use free and open source software for bookkeeping and accounting is relevant for SMEs,” says Phil Weir, founder of Flax & Teal. His company uses GnuCash, a well-known double-entry bookkeeping solution distributed as free software, and related tools.
Weir is concerned that, for now, HMRC is precluding the use of open source for VAT filings. “Viable open source options are a core criterion for any business-critical component. This is a commitment we make to our clients, across our infrastructure, administration and consultancy,” the company said in a statement published on Monday.
The statement is a response to recommendations made by a Select Committee at the UK’s House of Lords, the Parliament’s upper house. The Lords urge HMRC to provide free (as in beer) software option: “We question the logic of requiring taxpayers to spend additional money to pay their tax. Since a free option has not emerged from the software industry, the Government should consider again the case for providing a basic, free software option.” In addition, Mr Weir would l have preferred ike the Lords to recommend software that is free as in speech.
HRMC itself is not unfamiliar with open source software. In 2014 the tax authority said its own use of open source solutions is “massively cost-effective”.
Perhaps the UK authorities can take a cue from their French peers. To fight VAT fraud, France wants to shore up the rules on VAT software. In 2016 the country’s tax authority proposed to ban any VAT-filing software that users can modify – effectively blocking the use of free and open source software for this purpose.
This summer, after discussions with France’s free software advocacy group April, the ministry softened its position. Open source software will now be allowed for VAT filings, but if a user changes the software it automatically becomes their own version. This creates a fork that shields the original free software project from any liability.
Recommendations by the House of Lords
HMRC list of software allowd for VAT filing
Discussion on the GnuCash mailing list