Companies and eventually individuals could face fines of up to £3,000 under the new Finance Bill if they fail to submit their tax return over the internet.

The government revealed yesterday that so-called 'e-filing' will come into force for large companies within the next few years, but it will also be imposed on individuals by 2010.

But the bill is hugely unfair for those people who do not have internet access, such as elderly people and their carers, and will mean they will either have to get someone else to submit their form electronically, or face a crippling fine.

Both the Chartered Institute of Taxation, the CIOT, and the Association of Chartered Certified Accountants, ACCA, have criticised the proposed £3,000 fine as "underhand".

"Whilst we fully support the greater use of e-filing and electronic communications generally, the move should be carrot and not stick," said John Whiting, president of CIOT.

"The systems should be made attractive to [people] so they want to use them, rather than being made compulsory with penalties for those unwilling to use them," he said.

The CIOT yesterday submitted its white paper to the government, asking for an extension to this new electronic filing regime.

With just over a third (38 percent) of UK households currently on the internet, according to the latest findings from pollsters Mintel, this new legislation could mean that the remaining majority will have to get access within the next eight years, which seems very unlikely.

The proposed regulations appear in clause 132 of the Finance Bill, the full text of which can be downloaded here.