TaxPersonal TaxRevenue – Taxpayers are squeaky clean

Revenue - Taxpayers are squeaky clean

Self-assessment has sparked an outbreak of honesty among taxpayers, which has contributed to a #13.7bn boost in tax receipts, according to figures unveiled last week by the Inland Revenue.

Its annual report for the year 1 April 1997 to 31 March 1998 shows total tax receipts of #117.4bn, which is up from #103.7bn the previous year.

Nick Montagu, Inland Revenue chairman, said the tax receipts from self-assessment were significantly higher than had been expected.

‘It seems likely that the introduction of self-assessment encouraged taxpayers to bring their affairs up to date led to some previously undeclared income being notified to the Inland Revenue,’ he said.

Almost #8bn of the increase in receipts came from income tax, but there were also significant increases in corporation tax and stamp duty. Receipts from the windfall tax on privatised utilities were #2.6bn.

Montagu also highlighted the lowest Revenue costs per pound of tax collected since 1970. He described the figure of 1.41p as a mark of efficiency.

However, John Battersby, personal financial services partner at KPMG, said this figure also reflected a period of economic growth. ‘If your income goes up, it doesn’t cost the Inland Revenue any more to deal with you,’ he said.

Battersby also added that he expected the Inland Revenue’s costs to decline even further under self-assessment, as taxpayers and their advisers were shouldering more of the compliance burden.

He also pointed out that many taxpayers were waiting for the Inland Revenue to respond to their assessments, and that it was still dealing with a backlog of assessments relating to earlier years.

Referring to the net revenue increases, Battersby said: ‘Perhaps we should ask the chancellor for a dividend because his cash flow is so strong.’

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