Revenue backlog hits claimants

Many self-assessment taxpayers received higher statements of account than expected from the Inland Revenue this month despite filing forms for a reduction.

The excessive demands, with interest added, came to light after the Revenue issued its latest batch of statements following the first payments on account deadline on 31 January.

Angry accountants faced with confused clients have been told by the Revenue that a processing backlog caused the mistakes.

The problem is one of several teething troubles surrounding the first cash collection under self-assessment. It also emerged this week that a number of taxpayers who made sure payments on account arrived at the Revenue in time for the deadline received interest demands for late payment.

Richard Murphy, of Murphy Deeks Nolan, said: ‘Quite a number of clients wanted to reduce payment by submitting an SA303 form. Some had given up self-employment, others had reduced profits.

‘The forms were sent back in December and January, but my clients have received demands for the full amount plus interest.’

A Manchester tax agent, who asked not to be named, added: ‘The Revenue told us its computer system could not cope. It put the money in a suspense account and sent out interest demands.’

Clark Whitehill tax partner Mark Lee said the Revenue’s system was likely to have a number of start-up problems, but ‘there’s a lot of scare-mongering and slight problems being extrapolated as serious failings’.

The Revenue denied a backlog existed. ‘There’s no way we were unable to process payments due to sheer volume, but if they want to bring any cases to our attention we will look at them.’

Taxpayer relations with the Inland Revenue could crumble under self-assessment, warns the Chartered Institute of Taxation.

CIoT president David Frost claimed Revenue audits of taxpayers’ affairs could ‘lead us all down the adversarial road to conflict. Great sensitivity will be needed on all sides.’

Frost urged tax advisers to press MPs for tax relief for ‘audit victims’ or full repayment of costs. He said: ‘If your tax return is audited and it is in order, we do not see why you should bear the costs of your professional tax adviser’s help for proving your innocence.’