Self-Assessment: the self-assessment silly season

As the tax return rush sets in, experts are describing filing as a 'joke'. Brian Hanney reports

Taxpayers will once more be hit with problems when they file their self-assessment returns, say some of Britain's leading tax authorities. 'Filing has become a joke. The Revenue is not able to adhere to its own timetable. There are serious structural issues,' says Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants (ACCA). December and January are the traditional rush months for the Inland Revenue, but it is struggling to cope.

The entire history of the selfassessment initiative is littered with delays, mistakes and irate customers and advisers. This session appears on the surface to be no better than previous intakes. Many accountants want the 31 January deadline to be extended to ease the problems. But the government cannot afford any delay in the receipt of income it so obviously needs for the running of the public sector.

Roy-Chowdhury says the process would probably be even worse were it not for the fact that compliance issues are increasingly being devolved down to the individual or the firm. 'If you had the old system you'd have an even more serious problem.' He says this 'creeping compliance' is a global trend as more areas, such as benefit issues, are imposed on businesses.

He adds that extending the deadline would create significant problems for the Treasury. 'In the current economic climate, with an inflated borrowing requirement, it would be difficult. Income tax is a significant slice of government revenue.' Any extension could leave it starved of billions of pounds for months and hurt government cashflow.

Staff shortages

Roy-Chowdhury says there is 'quite a big backlog' in the processing of tax returns. One problem is shortage of staff, with officers often being moved away from collecting and processing work and into other departments.

Another difficulty is that there aren't enough highly trained people to deal with returns. 'They should be geared up to deal with all this. But the Revenue has been shedding staff and allowing early retirement. They've been shortsighted in allowing skilled people to have early retirement. If they're lettinggo of the wrong kind of people then that's going to create more problems. They need more senior personnel who understand tax.'

In the Revenue's last available annual report, for 2000-01, it said it had received 90% of tax returns by the January deadline, which is around 8.1m returns.

For September 2002, the latest figure available, the Revenue says 9.3m forms were sent out, up 3.4% on last year. However, those returned, at 4.3m, were 1.6% down, due to the higher volumes involved. That means nearly half were returned by that month. A spokeswoman said internet filing, at 5%, was 'twice as many as last year'.

But, like Roy-Chowdhury, others are less sanguine. Mike Warburton, tax partner at Grant Thornton, says Revenue processing is 'very slow at the moment. We've sent returns in but to get confirmation we've had to chase them half a dozen times'.

He also believes one of the problems is the level of staffing. He says: 'They're short staffed and it's getting worse.'

Nor is there much enthusiasm for online self-assessment. Rachel Day, Grant Thornton's tax compliance manager, says: 'There's no incentive for us to use it. I did my filings and it took me longer on the internet.' She accepts though it is 'a method of getting calculations.'

She adds: 'Some of the offices are the problem. It seems to me the bigger the tax office, the slower it's becoming.'

Warburton says: 'There are still 1m returns not submitted by the deadline, that's a system that's not working properly. There are 5% of returns which are not in six months later.'

He says: 'We're all finding the same problems and difficulties of processing. The economy grows and there's a more complex tax system. We could simplify the income tax system.'

Internet glitches

The Inland Revenue denies there is any real problem with processing, despite glitches on its internet filing system. Many people were unable to gain access during the most popular hours just after the Revenue announced a computer enhancement meant it could extend to December the online deadline for some people.

In the summer the system was suspended for 32 days when it was discovered some people were able to discover other people's details online.

A spokeswoman said: 'We're fairly hopeful there will be no problem. We're continually working on reminding people about deadlines.'

ACCA recently warned taxpayers they must satisfy themselves the calculations they receive from the Revenue are accurate. Its June survey showed delays and incorrect calculations headed the list of difficulties members experienced.

Accountants' views of self-assessment: survey shows delays and miscalculations

98% of respondents experienced problems because of Inland Revenue system failures or errors on their part.

Only 5% filed their returns via the internet, which is above the national average.

80% had to spend extra time on their clients' returns because of Revenue failures or errors.

Of those who did spend extra time on returns because of these failures and errors, 46% had to write off all the extra costs generated while only 16% recovered all costs from their clients.

24% of members had been late with some of their returns, with 41% being late with some or many of their payments.

29% thought the surcharges were unreasonable

Overall, 29% thought no real improvement had been made in the system, 39% still found problems with it and 7% thought it was still chaotic.

Source: ACCA survey, 2002

Be the first to vote

Rate this article

Related Articles