Procrastination the biggest stumbling block in self-assessment

Procrastination the biggest stumbling block in self-assessment

With the 31 January deadline fast approaching, procrastination is no longer an option for self-assessed taxpayers

WITH 31 JANUARY little more than three weeks away, personal tax practitioners will be wearily casting their eyes at their burgeoning in-tray as they fill with last-minute self-assessment details.

Despite having been given plenty of notice, the vast majority of taxpayers will inevitably put the job off until the last minute. For many, it’s been the biggest issue in self-assessment since the system was introduced.

Of course, HM Revenue & Customs recognises that, and promptly issued its novel ‘find inner peace’ advertising campaign in a bid to appeal to taxpayers’ sense of relief once the job is out of the way. In spite of that, most of the 10.5 million self-assessment forms HMRC will process will come through after mid-January.

“In 16 or 17 years of self-assessment, the basic problem is still the same,” says Smith & Williamson tax partner Richard  Mannion.

“Human beings like to procrastinate, so trying to get people to keep the information on a daily basis and send it in at the end of the tax year just doesn’t work, and there’s this expectation that ‘if I send it to my accountant mid-January, it’ll get done’.”

Aside from the inevitable annual build-up, no new issues are expected this year – bar inevitable minor software glitches – and little has changed since last year, although 2014 will see the well-documented changes to child benefit kick in.

This year will see a small pilot of supplying lost or forgotten login details by e-mail – rather than physical post.

It will only work, however, if the taxpayer has provided HMRC with their e-mail address in the past.

The most major recent changes have been to penalty system, says Mannion, with the introduction of £100 late filing fines – whether you pay up completely and accurately or not.

After that, daily £10 fines up to £900 are also in place if the taxpayer has not paid up to three months after the deadline. Should six months elapse with no payment, an additional penalty of £300 or 5% is imposed, whichever is higher. After a year, a further £300 or 100% of tax owed is imposed.

Those changes, as opposed to simply settling the bill late – as was previously the case – increase the pressure on self-assessment taxpayers, says Mannion.

“Leaving it to the last minute creates problems for everybody.When people are tired and they’ve got this deadline, it’s very stressful and they do make mistakes. From a risk-management point of view it’s not great,” he says.

“It really is worth setting a day aside to this done.”

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

Professional Services Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine

Accounting Firms Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021

Making Tax Digital Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource