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Customs & Excise is considering requiring all VAT-registered companies to keep an electronic "audit file" recording the firm's invoices and payments over the previous year. The file would be saved for audit purposes and passed electronically to Customs, possibly using XML.
The change to tax auditing could come into force next year, according to Basda, which represents more than 250 software houses and developers.
It would make it easier for tax inspectors to check company accounts and avoid unnecessary site visits, but could cause headaches for IT directors if their software suppliers cannot provide the necessary updates.
Details of the audit file are due to be agreed at a meeting of the Organisation for Economic Co-Operation and Development later this month, said Dennis Keeling, chief executive of Basda, which is a member of the OECD tax steering committee.
Changes to the tax inspection rules are due to be published as a recommendation to all member countries by the end of the year.
Keeling said suppliers did not want to go to the expense of upgrading their software to incorporate the new tax rules unless the government introduces legislation requiring them to do so.
"With the pressure on product enhancements, following a bad recession for the industry, software developers cannot afford the huge investment in embedding the standard audit file for tax into their packages unless legislation requires them to," said Keeling. "Every enhancement has to have a return on the investment."
Customs & Excise said it would consider options for implementing the standard audit file for tax, including the suitability of current legislation. It said it was consulting other stakeholders, including Basda.