Revenue goes its own way on self-assessment
Millions of self-employed people face overpaying tax ‘year on year’ after the Inland Revenue failed to heed advice from the Chartered Institute of Taxation.
During the development of the new self-assessment regime, the Revenue has listened to tax experts’ concerns and changed its approach to several issues to simplify the system.
But the CIoT was dumbfounded by the Revenue’s ‘stubborn’ decision not to rejig two ‘essential’ arrangements for pensions and capital losses, despite strenuous argument by the institute.
Taxpayers who provide for their own pensions through retirement annuities or personal pensions can currently ‘carryback’ premiums paid to the previous tax year. Under self-assessment such arrangements will be ignored when interim payments for the following year are being calculated, leading to annual overpayments.
Self-assessment taxpayers will also be forced to estimate capital losses without help from the Revenue, leading to the possibility of being penalised for tax underpayment when they make gains. In the past, many inspectors have unofficially agreed losses.
Chairman of the CIoT’s technical committee John Whiting said: ‘We believe this helpful practice will continue. But that depends on the attitude and workload of individual inspectors, whereas it should be the right of the taxpayer.
‘It is not too late for the Revenue to change its mind on these matters.’
