More help at hand for calculating tax returns

The Inland Revenue has signalled a major shift in its approach to self-assessment by promoting more widely the fact that it is willing to calculate tax payers’ liability after they have submitted their return.

The approach emerged at the launch of the Revenue’s latest version of its self-assessment return, hailed by tax advisers as a major step forward.

The Revenue will carry out all computations on returns submitted by 30 September. Price Waterhouse tax partner John Whiting said this amounted to a ‘significant change of emphasis’. And Grant Thornton tax partner Mike Warburton said that the Revenue’s self-assessment trial in Leicester had thrown up some unsurmountable problems.

‘A lot of taxpayers will be overwhelmed. That came out clearly in Leicester where 20% failed to get the return in on time,’ Warburton said. ‘Many of those sent in were incorrect, and clearly this is a major problem for the Revenue. This is why the Revenue has swung around and is publicising the fact that it will do the calculations for taxpayers. Taxpayers will now either have to get returns in early or be driven into the grateful clutches of tax return outfits.

Doing it yourself could prove too difficult for the majority.’

Binder Hamlyn tax partner John Snelgrove warned that Revenue staff redundancies could have an effect on the success of self-assessment in its first year.

He said: ‘I am fearful for Joe Public. I have never shared the pessimism of some of my accountancy colleagues. But morale is very low in the Revenue and staff cuts are very serious.

‘It is getting rid of people who are long-serving with lots of expertise.

Those left are the computer generation and don’t actually know what the answer will be because they cannot do returns manually. That worries me a good deal.’