Gordon Brown’s decision to green-light a proposal for tighter self-assessment deadlines without consulting the affected parties is being attacked by small businesses and their advisors.
The decision, which was announced in the Chancellor’s Budget in March, springs from a recommendation by Lord Carter of Cole – who was tasked to review HMRC’s online services.
His recommendation, which was immediately accepted by the government, was for paper self-assessment tax returns to be received by HM Revenue & Customs by the end of September.
Similarly, taxpayers submitting their self-assessment forms online should ensure their returns are received by November 30.
The proposals, to be enforced from 2008, mean that taxpayers have considerably less time than ever before to prepare their tax returns, as the current deadline for online and offline taxpayers is January 31.
Given the complexity of completing the self-assessment tax form, small business groups are warning that the self-employed, micro traders and individuals with complex tax returns face unprecedented pressure.
Neil Hamper, national tax spokesman at the Federation of Small Businesses, said, “In the Budget the Chancellor accepted Carter’s recommendations without any consultation.
“This creates a shorter period in which to gather up information to complete tax returns. For small firms who submit their own returns this will increase the pressure on them. For those that use accountants it will increase the cost of doing so as their service provider will have to take on temporary staff to handle the increased workload. Either way it will cause serious difficulties for small firms and accountants.”
Leading accountants have indirectly supported the Federation’s appeal by gathering over 200 responses from industry practitioners who claim the proposal is unworkable.
Officials at the Tax Faculty of the Institute of Chartered Accountants of England & Wales will soon deliver advisors’ response to the proposal – not that the government has invited one, to “demonstrate clearly that the proposal will generate more rather than less paperwork.”
In addition, the Faculty members claim tightening the deadline for self-assessment returns will place “impossible strains on advisers and taxpayers; be unworkable as information will not be available, create major employment issues, increase costs for agents, taxpayers and HMRC and work against the government’s policy objectives.”
Optimistically for the proposal’s critics, the Faculty pointed to an early day motion recently tabled in Parliament, which suggested the voice of small business is being heard.
“This House notes the proposal to shorten the deadline for submission of self-assessment tax returns… was made without proper consultation with tax advisers and their clients,” it states.
The House also “believes the current proposals will place an undue burden on taxpayers by requiring them to provide information to their advisers in a shorter timescale.
It added it “further believes the current proposals will lead to an increase in the number of provisional and incorrect returns, which will require manual amendment by HM Revenue and Customs (HMRC) as their online systems are unable to accept amendments)”
It concluded that “far from spreading the workload for accountants and HMRC, the proposal will create a larger peak at a different time; therefore [the House] urges the Government to withdraw the proposal; and recommends that the Government consult with the tax profession before bringing forward any revised proposal.”
The government is under similar pressure from the Federation. In a statement and on behalf of its small business members, it said, ”We call on the Government to re-visit their decision to implement Carter without consultation or consideration of the practical impacts that this will have on small businesses and the accountancy profession.”
Jun 13, 2006
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