Revenue unmoved

Revenue unmoved

The Revenue is resisting pressure to extend the deadline on self-assessment returns.

It’s been something of an annus horribilis for the Inland Revenue -sessment returns. but the apocalypse is yet to come.

Last week’s furore, when the general commissioners of income tax hit out at misleading publicity from the Revenue about self-assessment deadlines, was just the latest in a long line of problems for Hector and his friends.

In October alone, the Revenue was savaged for its confusing treatment of pounds and pence in self-assessment returns, and then faced the embarrassment of the English ICA calling for an extension of the 31 January deadline.

But the Revenue remains unmoved. ‘We are still aiming to get 100% self-assessment returns in on time,’ said a Revenue spokeswoman this week.

‘And as we are ahead of target, we have no reason to be pessimistic. There is no way we will be extending the deadline. That would be totally unfair to all the people who have already got their returns in, and would upset the plans of others.’ Last Friday, around 4.5 million returns had been received, leaving four million to come in between now and the end of January.

And as the great day draws nearer, this figure is going to be scrutinised with increasing interest. The argument over pounds and pence was defused with an unprecedented apology and a new guidance note. The general commissioners’ complaint has been dismissed too, with the Revenue claiming: ‘We were not being alarmist. We published a list of reasonable excuses, but we made it perfectly clear that people could appeal to the commissioners if they did not agree with us.’ Such issues are surmountable, but millions of non-filed returns may prove more troublesome.

Although the Revenue insists all is going even better than planned regarding self-assessment returns, many tax practitioners expect a sizeable shortfall.

Richard Murphy of Murphy Deekes Nolan said he anticipated around two million late returns. The government is basing its financial projections on the basis that around 1.4 million people will fail to file their returns before 31 January. Michael Jack, the previous financial secretary to the Treasury, said he expected a failure rate of around 15%, which equates to almost 1.3 million people.

Richard Shooter, chairman of the self-assessment monitoring group, who initiated the call for an extension of the January deadline, said he was receiving an increasing number of phone calls and letters about the deadline.

‘There are too many problems, and too much new information which is only becoming available now,’ he said ‘This has resulted in a great deal of alarm among many practitioners. They’re realising that they’ve got only 14 weeks to respond, and that although they thought they’d be alright, time is running out.’ Shooter also pointed out that the outstanding returns will ‘in many cases’ be the most complex ones, and therefore most time consuming to complete.

All of this points to something of a cataclysmic New Year for the beleaguered Revenue. It has warned time and time again that it will be enforcing a mandatory penalty of #100 for every late return. Returns more than six months late will incur a charge of #200. But enforcement could prove impossible.

‘Effectively, this statutory penalty will create the biggest, single, mass law-breaking in history,’ says Murphy. ‘It could make the problems with poll tax look silly in comparison. The poll tax fell down in the end because the courts couldn’t recover the money. Self-assessment faces a very similar problem: how on earth do you go about collecting #140m from 1.4 million taxpayers?

‘In some cases, we’re talking about grandmas who haven’t filled in their returns because of brown-envelope phobia – you can’t fine them all.’ It is this kind of logic which has lead one independent pundit to declare that ‘self-assessment could prove to be the Tories’ poisoned chalice for Labour’.

Certainly, many practitioners and their clients are likely to feel hard done by, and may consider seeing what will happen if they refuse to pay.

All the late payers could go to the general commissioners and argue they haven’t been given long enough to file these new returns. The costs involved in arguing for an extension should dissuade the majority from making such an appeal, but any surge in appeals could put the system under a great deal of stress.

Of course, the Revenue is still insisting that penalties will be dished out from 1 February. But there is a feeling it may have to be more lenient.

Jack has said fines should be applied ‘with a light touch’. A heavy-handed approach would help no-one, and look politically unwise.

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