Self-assessors rejoice as tighter tax deadline is axed

Nine million taxpayers are sighing with relief after Lord Carter this week recommended his controversial plan to tighten the deadline for self-assessment tax returns should be scrapped.

The deadline for personal self-assessment tax returns should remain January 31 for returns filed electronically and October 31 for paper returns – a change of one month, the businessman said.

In his March Review of HM Revenue & Customs online services, Lord Carter recommended e-filed returns should be received no later than November 30, while postal returns should be filed by September 30.

Creating a shorter period for the nine million people covered by self-assessment – mainly micro companies, the self-employed and people whose tax affairs are complex, was attacked as costly, unfair and unworkable.

Such was the verdict of the Federation of Small Businesses, all the big four accountancy firms and 104 cross party MPs - who warned the move would “place an undue burden on taxpayers.”

The MPs also attacked the government’s bold decision to green-light the proposal for tighter self-assessment deadlines - without consulting the very people it would impact the most.

Reflecting on the tax U-turn, the country’s top accountants declared victory for small businesses and their own profession, which has been lobbying to abolish the proposal since its inception.

“We welcome today’s announcement that on the basis of this new evidence Lord Carter has revised his recommendation to ministers,” said the Institute of Chartered Accountants in England & Wales, joined by the AAT, ACCA,ATT and the Irish institute, ICAS.

“We believe that this announcement demonstrates clearly the effectiveness of the process of discussion and dialogue in which we, HM Revenue & Customs, HM Treasury and Lord Carter have engaged on this issue.”

The joint-statement went onto pledge “full support” for the government’s policy objective of increasing the uptake of the Revenue & Customs e-service, for the good of the taxpayer; advisor and authority alike.

It stressed however the importance of a statement in the taxman’s Regulatory Impact Assessment, which aims to improve uptake of e-services, stating “success of the proposals will be constantly monitored and evaluated.”

Such a willingness to inspect the plans aimed at boosting visitors to the e-service, with the implication of altering them if the burden on taxpayers rises, is a process close to the heart of Roger Halson, Deputy Director of HMRC’s Small Medium Enterprises & Employers Unit.

Responding to questions from Freelance UK at Enterprise Nation 2006, Mr Halson suggested a positive sea-change in the government’s attitude is already underway.

“As you recognised, Lord Carter has just announced he will look again at the knock-on effect the earlier deadlines for self-assessment tax returns will have on people within the system," he said.

"I think his move reflects a very healthy change in the way government is working.”

Mr Halson refused to be drawn on whether it was “wise” for the government, specifically Gordon Brown, the Chancellor, to green-light tighter deadlines for self-assessors without consultation.

But he conceded: “There is, I gather, a lot of concern from accountants about their actual ability to deliver in time for the earlier filing dates for self-assessment.

“Lord Carter’s Review was an independent review. We gave evidence to the Lord Carter but HM Revenue & Customs did not influence his conclusions. Some of the ‘heat’ which seems to have emerged since the Review seems to suggest” otherwise.

Clarifying HM Revenue & Customs’ role in the Review, Mr Halson reiterated, “Lord Carter looked at the whole tax issue; he looked at international comparators and came to conclusions which were put to government, not to Revenue & Customs, and government accepted them.”

More positively, micro businesses have started to witness and experience the benefits of the government’s drive to e-filing, he claimed.

“I think business has seen success online with HMRC such as the self-assessment filing peak in January 2006, which passed without any serious problem. The second filing peak in May for employers also passed without a serious problem

“Lord Carter’s Review,” Mr Halson said, “is an opportunity to enable businesses to file their tax returns easily but also, it’s a very good opportunity for HMRC to see how online services can take some of the capacity for error and confusion out of the system.”


14th July 2006

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