TaxPersonal TaxMissing the obvious point

Missing the obvious point

Isn't it odd how, year after year, successive chancellors of the exchequer fail to make the one obvious, logical and uncontroversial change in their Budget - namely to change the end of the income tax year from 5 April to 31 March? All other tax years (corporation tax, VAT, rates etc) end on 31 March.

All other government departments run to 31 March; there is even a law which directs the government to end all its financial years on the 31 March; and yet, for some extraordinary and unexplained reason, we still have to complete our clients’ and our own tax returns with details that relate to the illogical and maddeningly awkward year which begins on 6 April in one year and ends on 5 April in the next.

‘It would make far more sense if the income tax year ended on 31 March.’

This is the quote from a letter that I wrote to The Times just after the Budget in March 1982, over 18 years ago. It was merely a staging post in a campaign that I have been running for nearly 25 years; a campaign to get this absurd anachronism of 5 April corrected.

This campaign to change the tax year-end has received support from:

  • English ICA;
  • Faculty of Taxation;
  • ICAS;
  • CIOT;
  • District Inspectors of Taxes;
  • Parliamentary draftsmen;
  • Programmers of PAYE packages;
  • 69% of finance directors in the top 200 UK firms; and
  • Private individuals.

In fact, everyone except the powers that be in the Treasury.

The arguments in favour of change are overwhelming. We don’t have the room in this short article to go into them but the biggest argument of all, which anyone can see, is that to change would be simple common sense.

There are said to be arguments against change, which Treasury officials hide behind, but when these are trotted out, they are seen to be either bogus or easily overcome. One such objection is that the year of change would be very complicated to administer.

This is sheer nonsense when you consider that Germany, Italy and Israel have all changed their tax year-ends and, according to a government report, experienced little difficulty.

One of the strongest arguments in favour of change, to which the Treasury pay no heed whatsoever, is that it would make hundreds of millions of pounds for the government in the year of change – a one-off tax bill that I doubt any of us would notice paying. For the rewarding convenience change would bring it would be a small price worth paying.

Hugh Williams is a senior partner at HM Williams.

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