Tax experts have hit back at government ‘scaremongering’ claims over self-assessment.
Retaliation came as the Inland Revenue sought to allay fears that early self-assessment tax returns would be unfairly targeted for investigation.
Dawn Primarolo, financial secretary to the Treasury, accused accountants of exaggerating problems with the new regime to create business.
Ernst & Young’s Phil Davis said: ‘It’s disappointing coming from a government that warned about the dangers of rushing into self-assessment while in opposition. It clearly is not going to plan.’ Price Waterhouse’s John Whiting added: ‘Politicians are being disingenuous if they say it’s easy.’
The government department last week began a mailshot of 2.5 million taxpayers without agents encouraging early return of forms. But several Big Six firms indicated they would send in clients’ forms near the 31 January deadline to limit the likelihood of high net worth individuals being picked out.
The Revenue claimed systems put in place before forms were sent out would determine which taxpayers were subject to an inquiry.
One Big Six firm said it would examine all its returns before filing to determine which could trigger probes. A senior tax investigator for the firm said it would send them in ‘during the busy periods’ for the Revenue ‘so tax officers with nothing else to do would not unfairly examine them’.
Robert Maas, senior tax partner at Blackstone Franks, plans to encourage staff to hold on to their forms until October or November and urged other firms to follow suit. ‘I hope the Big Six sit on their returns until the last minute because then the Revenue might explain how someone who files early will not be unfairly treated.’
Maas believes the Revenue will select tax returns on a month-by-month basis following the guidelines in its reference manual. ‘It is common sense that a form filed in a low-return month will have a higher probability of investigation.’
A Revenue spokesman stressed that its computer systems would filter forms satisfying the agency’s calculations and pass the remainder to local offices.
‘Those forms we want to examine will get examined,’ he said.
‘If we don’t receive any forms in one month, officers will not be sitting around twiddling their thumbs. If we receive them all at the end of the year, we will process them all and inquiries will be made into those returns which fulfill certain pre-set criteria.’
‘We have a sophisticated IT system and we are content we have enough staff to handle all these situations,’ he added.