The shortening of tax return deadlines proposed in the Carter report, and
apparently already accepted by HM Revenue & Customs, has generated a great
deal of negative comment and the unprecedented co-operation of the major
professional bodies in opposition.
Doom merchants are already forecasting that staff will only be employed for
eight months instead of 12; that accounts previously drawn to 5 April year end
will all be changed to new dates to allow for preparation time (with potentially
serious side effects in tax terms for their clients).
Isn’t it a good thing to reduce the filing time to eight months if it means
you can improve your efficiency, use the other four months to plan for next year
and offer new services to clients? It’s much easier to recover fees for work
that improves a client’s net wealth rather than simply taking over the
Isn’t this an opportunity to offer your clients a differentiated service,
with appropriate charges based upon the time they deliver the information to
you? For that matter, why wait until the 6 April to start the tax return? While
gathering the 2007 information you could ask for ongoing 2008 information and
enter it into your database in advance.
The Carter proposals may offer several opportunities to practitioners. There
would be four months left at the end of the current tax year for proactive tax
planning based on the information in the previous year’s complete tax return.
If clients send in information sooner, there is less chance they will forget
about a new source of income (a share purchase for example), resulting in more
accurate returns and less chasing for information.
Enquiries can be raised with clients about new information while it is still
fresh in their minds because they will be sending the information sooner. More
contact with clients, and early receipt of relevant information is a great
opportunity to undertake more tax planning and other services, boosting your fee
Earlier submission of tax returns should mean less incorrect or estimated tax
demands, and at least more time to make sure that HMRC gets it right.
Lord Carter makes it clear that HMRC must improve its systems and services to
compare to commercial standards because there have been far too many instances
of failure due to a lack of proper planning by HMRC and poor IT advice. So if
nothing else, a sea change has to happen in the corridors of power.
Who will benefit from the Carter proposals? HMRC, of course, because tax
returns will be filed earlier and more tax returns will be filed electronically
and therefore accurately. But we feel there are advantages for the practitioner
too. So forget Carter and think smarter.
Jerry Rihll is managing director of software supplier Digita
Does Darwin's theory apply to taxation? Colin ponders...
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