Hector to clean up

The Inland Revenue is set for a #200m self-assessment penalty windfall after tax experts forecast this week that up to two million returns will remain unfiled after the 31 January deadline.

With just over three weeks to go before the cut-off date for submissions, the Revenue revealed yesterday that 3.4 million of the nine million forms issued since April last year are still outstanding. Few returns were submitted over the Christmas period despite Revenue warnings of penalties, but the department is expecting a late filing ‘flood’ as the deadline approaches.

Jonathan Bruce, a senior tax manager at Ernst & Young, warned of a political outcry if the penalties are levied, but said that the penalty message was only just getting through to clients. He claimed that, even with an increased rate of return, just 1.4 million more forms will be sent back.

‘We’re working flat out to process all of our forms, but many clients have still not filed information with us,’ he said. ‘The Revenue has scotched rumours of an amnesty of up to one month, or being let off if you pay the tax in full by the end of the month,’ he added.

Most of the missing forms are with agents, the Revenue believes. More than 90% of unrepresented taxpayers have filed, but just 50% of represented taxpayers’ forms have been received.

The profession was outraged by Revenue claims in Accountancy Age (11 December 1997) that accountants were stockpiling returns to avoid investigations.

Essex certified accountant David Gordon wrote to Doug Smith, the Revenue’s self-assessment coordinator, saying that: ‘To believe that we would deliberately sit on completed returns when each return represents at least #125 in fees is beyond comprehension.’

E&Y’s Bruce added: ‘It’s not a case of sitting on the forms, just that there is a huge number to process. We will ensure that all of our clients’ forms are in before the deadline.’

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