By Sarah Toyne BBC News Online personal finance reporter

Companies and individuals could face fines of up to £3,000 if they fail to file their tax returns via the internet - so-called e-filing - under measures proposed in the Finance Bill, BBC News Online can reveal.

This is punitive. We should not be doing it in this way John Whiting Chartered Institute of Taxation

In the Budget, the government announced that e-filing for payroll will be phased in for larger businesses over the next few years, with all employers from 2010 being required to file online.

BBC News Online has also learnt that elderly and disabled people employing carers, or people who use nannies, will also be required to comply from 2010 if they pay them through a payroll system.

Both the Chartered Institute of Taxation (CIOT) and Association of Chartered Certified Accountants (ACCA) have criticised the proposed fines as "punitive" and "underhand".

They have also criticised the way the legislation has been framed, and said they would be lobbying MPs about the plans.

Open book

John Whiting, president of CIOT said that he was fully in support of the moves towards e-filing, but he strongly objected to "this stick not carrot" approach .

He also objected to the way the Bill has been framed, which will mean that little parliamentary scrutiny will be required if the Revenue or Treasury wishes to extend the clauses powers.

He said: "This is punitive. We should not be doing it in this way... and there is no guarantee that we will be sharing the benefits."

Chas Roy-Chowdhury of the Association of Chartered Certified Accountants (ACCA), accused the government of being underhand.

"The clauses are so loose. It will be so easy for them to introduce regulations on the back of the bill, which will increase internet filing to all other aspects of taxation without being subject to parliamentary scrutiny.

"This is typical, they think that people will forget about this sort of legislation."

Review

The publication of the plans follows recommendations to a recent review of payroll services, which was published earlier in the year.

It called for all businesses to computerise their payroll system and file all tax returns via the internet by 2007.

The review also encouraged carers and families who employ nannies to use intermediary services.

Back of bill

The clauses referring to mandatory e-filing are at the back of the 488 page Finance Bill.

They outline provision for the Inland Revenue to "make regulations requiring the use of electronic communications", if the Commissioners of the Inland Revenue decide.

One possible item outlined in the bill is a fine of up to £3,000 if businesses and individuals fail to comply with these regulations.

A spokesman recognised that the Bill was broad enough to be applied to other taxes.

She said: "It is capable of being applied to other taxes, but there are no plans to do so at the moment."