Member Article

Procrastination is the thief of tax returns

HMRC has launched a new campaign to encourage people who were issued a tax return for any year up to 2011/12, but have yet to submit it, to do so.

Once individuals have told HMRC that they wish to participate they have until 15 October 2013 to complete and submit outstanding returns, and pay the tax and national insurance that they owe.

Once that deadline is passed those who fail to respond will face the full wrath of HMRC with penalties of up to 100% of outstanding tax, or even criminal investigations.

Almost every accountancy practice has a hard core of clients who are one or more self-assessment tax returns in arrears, and almost certainly it is guaranteed that certain individuals will appear on this ‘list of shame’ on a regular basis. Usually, after a few years, their accountants’ pleas finally bear fruit and there is a frenzy of catching up and tax return submission.

For some people this failure to return seems to be a deliberate tactic, almost part of a game with HMRC to see how much they can get away with. This type of client may even be making regular lump sum tax payments, and just not giving HMRC, or the accountant, any clue as to what these payments are for. For the majority however, there seems to be a phobia where they cannot face dealing with the returns and predictably the longer this goes on, the harder it is to overcome.

Other recent disclosure campaigns have been successful in drawing in people who have previously failed to disclose income from many sources. These campaigns have often been based on the carrot approach (reduced penalties), as well as the stick of dire punishment for non-disclosure. It is interesting that taxpayers who are in arrears on returns, rather than deliberately failing to disclose income (or dare one say it, evade tax), are not being offered a similar carrot.

Hopefully this initiative will motivate all taxpayers with arrears to get themselves up to date in the most painless way possible. There can be no practical benefit in delaying tax returns, as the longer it is left, the gathering and checking of information becomes more challenging and penalties and interest build up. People will feel so much better once the arrears are unclogged and they can move forward with a clean record.

This was posted in Bdaily's Members' News section by Baker Tilly .