Third time lucky for tax returns ?
This year's 31 January filing deadline for personal tax returns was our third attempt at managing the self-assessment regime.
Speaking to accountants in many firms, large and small, I note ‘last minute-itus’ has not been reduced. In fact, clients were worse this year, as regards supplying their information late, than last year. Back in its December 1999 Tax Bulletin, the Inland Revenue explained its policy for enforcing the filing deadline this year. Hopefully all Accountancy Age readers are aware the deadline became (according to the Bulletin) in effect 7.30am on Wednesday 2 February. But I suspect many last-minute filers will be disappointed to learn the due date for payment of tax remained 31 January. The next few weeks will be interesting. Based on our experience of previous years we can expect clients whose returns were filed at the end of January (or later) to receive at least two statements of account from the Revenue. Firstly a statement showing the tax paid by 31 January plus £100 fine as ‘we have not yet processed your tax return which you may or may not have filed by the deadline’ (or words to that effect). The tax paid will appear to be in excess of that due and so potentially repayable to the client.
Clients will be confused by the apparent overpayment. They will also be frustrated and start to speak ill of their accountant for apparently not getting the return in on time despite promising they did so.
A second statement of account will follow, once the tax return has been processed. This will probably still show the £100 penalty but will either have an adjusting credit wiping it out or it will use part of the tax payment on 31 January to satisfy the debt. Again, clients will contact their accountants for clarification. Happy days.
There are probably a large number of fee notes yet to be issued for the personal tax return work done in December and January. Accountants need to be conscious that even though clients may pay (grudgingly) for any extra work/time costs arising from the late delivery of their details, they may not be happy. If we are lucky, satisfied clients will tell us how they feel. Dissatisfied clients, apparently, often tell everyone else.
Feeling lucky? I like the suggestion that ‘luck’ can be defined as Labour Under Correct Knowledge – ie getting good results from working hard doing the right things in the right way at the right time.
I’m off now to plan for next year’s tax return deadline.
Mark Lee is a tax partner at BDO Stoy Hayward and vice chairman of the English ICA Tax Faculty.