Scots ICA proposes relief on self-assessment advice

Public hostility towards self-assessment could overwhelm the Inland Revenue’s new tax regime unless it introduces some relief to taxpayers meeting the cost of an adviser for the first time, the Scots ICA has warned.

The institute has written to Michael Jack, chief financial secretary to the Treasury, demanding the extension of tax relief on professional advisers’ fees to all taxpayers. Currently, only the self-employed are entitled to relief. The institute tax director Derek Allen said the lack of relief for Schedule E taxpayers was ‘clearly unfair’. He added that if the latest version of the tax return did make compliance easier, there would be ‘no risk’ in granting relief to taxpayers who incur fees with a tax adviser.

He added: ‘This is not a self-interested plea on behalf of the accountancy profession. Many individual taxpayers will seek assistance from their banks or tax advisers. The growing complexity of the tax system should be recognised. The costs a random audit might inflict on an individual could lead to hostility towards the system.’

But Binder Hamlyn tax partner John Snelgrove described the plea as a ‘non starter’. He said: ‘No one is forcing taxpayers to go to an adviser.

However, giving some relief to taxpayers subjected to a random audit would be welcome. For all taxpayers to get relief, however, is unrealistic.’

Gerry Hart, managing director of The Tax Team and former president of the Chartered Institute of Taxation, said a flat figure for relief would be a good idea. ‘A fixed amount of, say, 1% of salary could work. For someone on #20,000, this would mean #200 tax relief whether they had paid their adviser #100 or #500.

‘It would indicate the Revenue was recognising the cost of the extra burden placed on taxpayers under self-assessment.’