Comment – Simplicity’s the secret of success

When the dust settles on the first year of self-assessment, the Inland Revenue team responsible for its implementation will sit down and work out how to make the system work better.

The grisly post mortem examination will reveal Year One has not been a total disaster, but that it has been plagued by technical problems, over-complication and mistrust. The first two problems can be rectified with a bit of hard graft. The latter poses a much greater hurdle.

Accountants, tax agents and the public are fed up with being told ‘everything is fine’ when they clearly know it is not – even last week’s day-long computer systems crash was dismissed as a minor irritation.

The Revenue has won plaudits for trying hard, but what it has to do next time is be honest and open. That requires a massive change in mentality, but it is a change that must happen.

Self-assessment is basically a good idea. But how much easier it would have been if all sides were working together rather than pulling in different directions.

Now, as Year One draws to a close, taxpayers who have failed – either through ignorance, neglect or stupidity – to file a tax return face instant penalties of #100 plus interest and surcharges. It is a price more than a million look likely to pay. That is not the sign of a successful introduction.

Credit to the Revenue for convincing more than six million self-assessers to send the return back so far. But 23% – almost 1.4m – made a mistake when completing the return, 6% made errors so serious that the form had to be sent back.

Despite all the Revenue’s pleadings, taxpayers and even professionals have struggled with the form. Self-assessment should allow taxpayers to do as the name suggests – assess their tax affairs themselves, rather than be forced to sweat and struggle as they wade through the 8-page return and extra schedules.

Simplification is the key to self-assessment’s future success. Simplification of the return, and, more importantly, simplification of the tax system. If the Revenue is honest with itself, it will agree that is the long-term answer to its problems.

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