We are now in the third year of self-assessment – the much advertised change to the taxation system featuring the bowler-hatted Hector.
It is very probably indicative of the Inland Revenue’s original thoughts that it chose Hector as the name of its cartoon representative. As my dictionary tells me: ‘Hector – to bluster, to bully’. Was that a Freudian slip revealing the Revenue’s view of its brave new world?
Regrettably, the Revenue still fails to appreciate that if you set a deadline then the entire profession will seek to submit returns as close as is reasonable to it. No amount of advertising and PR will change human nature, and trying to persuade taxpayers and advisers that if they submit their returns early, they will not have a greater exposure to tax audit reveals either total naivete or a cynical and unfounded belief in the power of advertising.
As the third SA returns are being submitted it is the Revenue which appears to be struggling.
The second UK 200 Group survey revealed that 60% of all inquiries (tax audits) were launched in the last three months of the available 22-month window for 1996/1997. There are reports that correspondence is not being dealt with on a timely basis, with the Revenue demanding (as is its entitlement) replies on the opening of tax audits within six weeks and then ignoring those replies for eight or more weeks by sending ‘holding’ letters.
The moans and groans on SA are that we are not operating on a level playing field.
Penalty notices are being issued (not as many in the second year as the first) when a return has already been submitted. Interest charges and statements – the first computed by an imperfect Revenue software program, the second surely the product of a mind with a grudge against the world – absorb hours of professional time to correct Revenue errors for the satisfaction of the taxpayer. Who pays for that? Certainly the Revenue does not meet its fair share of the cost of the havoc it wreaks.
The greatest danger still lies ahead. At a Congressional hearing in the US in 1997 the head of the IRS was forced to apologise for the harassment of taxpayers. At present, the irritations are the slow response rate of certain tax offices, the havoc of those statements and the creeping and insidious attitude of indifference to any concept of taxpayer service offset by the shining example of certain ‘old-style’ tax offices and tax officers.
But what happens if and when the Revenue has so abused its good staff that it is only the awkward and inadequate that are left? ‘O brave new world that hath such people in it!’
David Ingall is a partner at J W Pickles & Co, Selby, Yorkshire
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