ACCOUNTANCY AGE SPECIAL: Tax returns crisis looms
One third of self-assessment tax returns have still not been submitted with less than a week to the final deadline and practitioners fear the system is close to collapse, Accountancy Age can reveal.
One third of self-assessment tax returns have still not been submitted with less than a week to the final deadline and practitioners fear the system is close to collapse, Accountancy Age can reveal.
With just five days until the 31 January deadline, the Inland Revenue has only received 6.32 million returns of the 9.64 million it has issued this year.
Additionally, tax experts fear the Revenue is about to target late submission of self-assessment returns as part of its initiative to drive up the number of investigations.
Andrew Shaw, tax partner at Kingston Smith, said the late submission of returns was often seen as one of the ‘red flags’ that may spur the Revenue to begin investigating an individual’s or a company’s tax affairs.
A Revenue spokesman denied the claims: ‘We look at tax returns for two reasons: if something is wrong we would do a full or aspect investigation. Or we look at returns randomly.’
In November, the Revenue confirmed it aims to increase the number of investigations to more than 750,000 a year with the most intrusive investigations set to rise to 150,000.
The use of relatively untested electronic returns by registered agents has also caused problems. One London firm said the Revenue’s system had been out of action for most of Monday with officials failing to notice for around four hours.
‘We are the unpaid guinea pigs checking if the system works. The Revenue is totally unwilling to acknowledge that their failure has cost someone money,’ Shaw added.
Additionally, tax practitioners questioned the Revenue’s ability to cut the number of late returns. In each of the first two years of self-assessment, some 650,000 returns were late.
PricewaterhouseCoopers tax partner John Whiting said: ‘Perhaps I should wait until the numbers of defaulters are known, but if the numbers have risen – or even if they remain the same – then the Revenue has a problem.
If one in 13 ‘customers’ fail to comply with their obligations, is the system all it should be?’
Revenue offices open this weekend for last minute self-assessment tax return rush