SALF1110 - Self Assessment: the legal framework: Returns and Quarterly updates: Functional compatible software
Functional compatible software (FCS) is a software program that enables a relevant person to meet their tax obligations by interacting with HMRC via the API platform.
The API platform is an ‘Application Programming Interface’ which enables a software program to communicate with HMRC. A ‘program’ can be either a single program or a set of programs.
A relevant person must use FCS to:
- Send quarterly updates to HMRC and make corrections to such updates
- Deliver returns in response to a notice to file (under s.8 TMA 1970) for a digital obligation tax year
- Keep and correct digital records
FCS may also be used to receive compliance related information from HMRC.
Where a relevant person delivers a return for a digital obligation tax year, they may also use FCS to notify HMRC of amendments to that return, but this is optional.
A tax return submitted via a channel other than FCS for a digital obligation tax year would not be a valid return as the FCS element of the legal requirement would not be met. The obligation to file a return would remain and a liability to penalty for failure to make a return may arise as a result.
Businesses can choose commercially available FCS products to suit their needs. Free products are available for those with simple tax affairs but there may be limits on how the product can be used, for example they may only allow a limited number of transactions.