What tax payers ought to know about Self Assessment

A change has come over the local Inspector of Taxes in the past three years. In one sense it is an advance and in another it is a step backwards. One major change is in the Tax Return. Whether you face the struggle of completing the Self Assessment Tax Return yourself or send it off to an accountant to complete for you, the completion of the form itself is a battle. There are a few who find its logic simple. Even the Revenue's own completion software, downloadable off the Internet only extends to the basic return. Those of you who are outfaced by this bureaucratic burden might be interested that each year The UK 200 Group of Practicing Chartered Accountants conducts a survey amongst its members to see how the Inland Revenue performed. Frankly, like the reluctant schoolboy the verdict is "Could do better".

Apart from the fact that the form and its supplementary pages are overcomplicated there is a widespread belief that the Revenue do not load the entire Return into their computer systems. It also appears that their staff are not properly trained for the massive inputting task they undertake each year. Mass processing of data is very difficult from the clerical jobs the staff were originally recruited to do. It was hoped the ELS (the Electronic Lodgment System) would relieve the difficulties but members of the UK 200 Group have started to complain the tax refunds under ELS are not being processed within a reasonable time. In fact some members committed to ELS comment that the system seemed to have gone backward in the past year.

It is not disputed that as far as the majority of Returns they receive are concerned there is no problem, but the professionals who see thousands of Returns themselves identify the worrying trends of lack of training in Revenue staff, the longer time to acknowledge and process Returns and an increasing difficulty in finding Revenue staff on the phone who can deal with a question. Recruitment problems in certain areas of the country undoubtedly contribute but staff were shed when Self Assessment was introduced and are difficult to replace quickly.

the other half of the change in your Inspector of Taxes is the introduction of a more aggressive investigation or "Enquiry" regime. Now your Return is sent into the Inspector by 31st January following the Tax Year and under normal circumstances he has a year to ask questions about the Return. The questions are of two types. "Aspect" enquiries are generally factual questions perhaps asking for a certificate to prove pension contributions or a brief explanation of something odd in a Return. As professionals we see these cropping up in about 1 in 50 Returns across the country but varying from area to area.

"Full" enquiries are more akin to a tax audit or investigation and depending upon the Tax Office or even individual Inspector can range from a polite but firm look into your business and ability to maintain your lifestyle on your earnings to an aggressive and intrusive series of demands for information about every part of your business and private life. Over the whole country "Full" enquiries are opened into about 1 in 238 Returns according to the recent UK 200 Group Self Assessment Survey. However, difficult parts of the country report variations from the above to about 1 in 50 Returns with some areas even higher.

Over the past three years, Inspector of Taxes have changed with the staff responsible for the processing of Returns under tremendous pressure but the staff responsible for the enquiries into Tax Returns are only just now beginning to find their feet. A Tax Audit or Full Enquiry can be frustrating and expensive experience for even a represented taxpayer and in the coming years the chances of being chosen can and will increase.