The most significant milestone of the of the new self assessment tax system passed peacefully on 31 January 1998. This was the deadline for submission of tax returns. The new system does not present any real problems for the accountants, but it is a daunting prospect for those businesses who prepare their own tax returns. When the 10 page tax return accompanied by an 11 page calculation guide and a 46 page guide on how to complete the return form arrived on the desks of small businesses earlier in 1997 there were predictions that the deadline for submission of forms would not be met by as many as 40 – 50% of taxpayers. These predictions were proved groundless and 10% actually missed the deadline.The advantages of self assessment to the Inland Revenue are considerable. It will be possible to set parameters for the likely tax bill for groups of taxpayers or in some cases for individuals and run the amounts declared through the computer system. Only the returns falling outside the expected parameter will be examined manually. With refinement over the years and fine tuning of the parameters, manual checking will be reduced progressively.
The success of the new system is almost assured now and to a great extent this is due to the careful planning that went into the change. Although the amount of paper contained in the envelope from the tax office looked daunting, the good design and use of colour in the guides enabled most people to get fairly close to the correct calculation. The error patterns will now be analysed and changes incorporated in the form and guides for 1998/99.
The challenge now is to deal equitably with those who missed the deadline, without raising a great deal of antagonism. Late submission of forms incurs an automatic penalty of Â£100, but where forms are received by the deadline, but unsigned or with pieces of data missing, it will be waived. The penalty will also be waived if a number of other circumstances apply, such as postal delay or death of someone close to the taxpayer.