Taxation – We did our best not to let clients down

By the time you read this, 31 January will have passed. Thent of self-assessment. government will undoubtedly have congratulated the Inland Revenue on the successful introduction of self-assessment, or at least the first stage – persuading the vast majority of taxpayers to submit their 1996/97 return on time.

I congratulate them also. The introduction of such a major change was a major task. There were always bound to be teething problems and most of these were successfully overcome.

But as much, if not more, praise for the success needs to go to the accountancy profession. I doubt the government will acknowledge the very real contribution of the profession. The problems it faced in meeting the deadline were substantial but, in the main, not of its own making. By and large accountants tried very hard to understand the new system, educate their clients, and get recalcitrant cases up to date.

Some of the problems involved computer software but the main pressure on accountants was caused by the Inland Revenue. In many cases, things we were told would happen did not. We were told the Revenue would still do the tax calculation if returns were submitted after 30 September. But many returns sent in during October or November were not processed by the end of January.

It is rumoured some tax districts were telling their staff to log returns but not process them until after the end of January.

I think that is unreasonable. I hope the Revenue will look into this and either categorically deny it or publicly explain why this happened.

Not only did the delays in processing mean some accountants were forced at the last minute to do the tax calculations they had been led to believe they need not do, but many were uncertain by the end of January which returns the Revenue had received and which might have gone astray in the post, and had to spend a lot of time trying to find out.

This problem was not universal. Some districts did well. A friend submitted a tax return to Waterloo 1 on 9 December and received the form SA310 on 16 December – a turnaround of five working days. We must give credit where it is due and thanks should go to Waterloo for providing a superb service.

It was unreasonable that clients were not issued with payslips until the middle of January. This caused a lot of extra work that should not have been necessary. Clients had to be told to send us their cheques to forward to the Revenue, or separate letters had to be sent for the return and the payment. There were also a great many phone calls – a major interruption – from confused clients.

Many returns were rejected for minor errors that could, and should, have been corrected/repaired by the Revenue. A number of correct returns were rejected because the Revenue did not know how to process unusual items – or because the Revenue’s self-assessment computer was badly programmed; local districts have been telling accountants of an array of programming errors but Somerset House believes that there were none (other than those already publicly announced).

A large number of accurate tax calculations were ‘corrected’ to an inaccurate figure – and in many cases tax properly due was repaid!

This put an enormous burden on accountants. Not only did we have to convince the client that we knew what they were doing when the Revenue had in effect told the client that we were incompetent, but we had to fathom out how the discrepancy had arisen from the very limited information provided by the Revenue, contact them to correct it, then persuade the client to pay the right amount and finally check the Revenue’s amendment of their correction.

We were surely entitled to expect the Revenue themselves to identify the reason for differences before they ‘corrected’ them.

We also had to cope with a great deal of incorrect and conflicting replies to queries from local districts, many of which seemed very reluctant to use the Revenue liaison officer system. The Revenue refused to allow a moratorium on bringing old work up to date in December and January to enable accountants to concentrate on returns – and on sorting out all of the above problems.

But somehow we coped. We did not let the public down. Well done to you all.

Robert Maas is a partner with Blackstone Franks.

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