E-dividends - IR consultation

The Inland Revenue has launched a consultation on new proposals to allow dividend vouchers and tax deduction certificates to be issued in electronic form rather than on paper, subject to the agreement of the recipient and the issuer.

The Revenue claims that early indications are that, once the necessary IT systems are in place, electronic dividend vouchers and tax deduction certificates will be cheaper than paper versions to produce, process and store. The Revenue has made it clear that it proposes to change the rules for vouchers and certificates so that they can be issued electronically with consent, but if either party does not agree, it will be necessary to continue issuing them in paper form.

Launching the consultation, Paymaster General Dawn Primarolo said: "Today's proposals meet the needs of the growing number of taxpayers who conduct their affairs electronically and reduce business costs. They also take forward the Government's drive to encourage e-business by further extending the range of electronic services offered by the Revenue."

At present, when a company pays a dividend to its shareholders, it is required to provide a written statement in the form of a voucher which is sent to the recipient by post. The voucher shows the amount of the dividend, the amount of the accompanying tax credit and the date of issue.

Similarly, anyone paying interest or making other payments where they are obliged to deduct income tax is required to send a written statement or certificate showing corresponding details.

The Revenue has conducted a partial regulatory impact assessment and has indicated that it would particularly welcome comments on the expected implementation costs or savings from businesses.

Comments on the proposed regulations and the initial assessment of the effect the proposed changes would have on businesses and individuals are invited and should be sent to the Inland Revenue by 12 September 2003. Subject to the consultation, it is envisaged that these changes will be implemented by the end of 2003.

Anyone who wishes to participate in this consultation should send their views to: Chris Davis, Revenue Policy, Cross Cutting Policy, S23 West Wing, Somerset House, London, WC2B 6LB

Email: chris.davis@ir.gsi.gov.uk