TaxPersonal TaxNew SA chaos fears

New SA chaos fears

Inland Revenue processing targets spark alarm about more penalty notice errors. Damian Wild reports.

The Inland Revenue has denied that it has failed to learn lessonsnotice errors. from the chaos that surrounded this year’s introduction of the self-assessment tax regime despite announcing new performance targets that appeared to do little to cut the number of penalty notices sent out in error.

Tax accountants say that, in some cases, as few as 10% of the penalty notices sent out by the Revenue last year to taxpayers who allegedly failed to submit their SA return by the 31 January deadline, were correctly raised.

Now new efficiency targets published by the Revenue a fortnight ago suggest the same mistakes could happen next year. By setting a target of ‘capturing’ 99% of the returns received by 31 January 1999 on computer by 31 March 1999, many tax specialists fear penalty notices will once again be issued.

This year, notices were sent out in February, before returns were fully logged on the Revenue’s computer systems.

The Revenue said this week it logs all SA forms on the day it receives them, which should prevent incorrectly issued penalty notices. But John Whiting, Price Waterhouse head of personal taxation, said: ‘History so far has proved it’s not entirely foolproof’.

Jonathan Bruce, senior tax manager at Ernst and Young, added: ‘Of every ten penalty notices I received (last year), nine were incorrectly raised.’ He said notices were issued in many cases where clients had no tax liability.

Moira Elms, Coopers and Lybrand’s income tax specialist, said: ‘We had a situation where a client received a #100 penalty notice and their return was sitting in a pile.’

A Revenue spokesman said with nine million taxpayers returning SA forms, errors were inevitable. ‘Of course we’re not complacent,’ he added.

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