I have been working in tax for a long time and January has been the same since the introduction of self assessment in 1997. I recall the days of assessment (yes I am that old!). One would grapple with putting figures on a form and wait in anticipation for the then Inland Revenue to calculate the tax and issue an assessment for the taxpayer to either appeal or settle. Then came along self-assessment – with the taxpayer (or their advisor) making judgement calls as to how they should be assessed and calculating the tax due. The stress of completing and submitting the forms on time, however, remains unchanged. In the early days of self-assessment we relied on a fresh-faced graduate, whose initiation process included running to the tax office just before they closed on 31 January and returning back to the office with a stamp from the Revenue confirming the tax returns had been filed in time. Failure was not an option!
Perhaps my favourite excuse: travelling the world to escape from a foreign intelligence agency
In recent years, we have had the online submission system, with paper filing only acceptable if submitted by 31 October – 3 months ahead of the 31 January online submission deadline. In theory, one just needs to click a button and submit a return, but it’s not that straightforward. There are the usual offenders, who despite a diligent tax advisor’s 6 April letter to prompt tax information gathering well ahead of the filing deadline, still manage to send it all in on the deadline day! Most amusingly, HMRC recently released the top ten terrible excuses for missing the tax filing deadline and as you would expect we have the usual suspects…that lovingly-wicked-paper-eating pet to the more unusual excuse, and perhaps my favourite, of travelling the world to escape from a foreign intelligence agency. Unfortunately, my clients over the years have not come up with such innovative excuses….
This year, deadline day falls on a Saturday but despite the weekend, we’ll still have the last minute stragglers who don’t submit until Saturday afternoon, even those that leave it minutes before the gateway closes to file. As such, we’ll have many of the team on standby throughout Saturday 31 January, avidly checking iPhones and Blackberrys to make sure our clients don’t miss the deadline.
There is sometimes a myth that tax returns are simple and easy to complete. However, with the current breadth of tax legislation, that certainly is not the case. Most of my clients have complex tax affairs, which often require informed judgements and good technical insight to ensure that their tax returns are filed accurately. Tax compliance used to be viewed as a commodity - for those clients with complex affairs in particular, I would argue it has become a real skill.
Also, global mobility has increased enormously and complexity with it. One of the cases we are dealing with is a UK resident, non-domiciled individual. He arrived in the UK a few years ago and prior to arrival did not seek full tax advice to manage his tax position. He therefore has complex mixed funds from which he has made remittances to the UK. Only a detailed analysis of his bank accounts and the entries therein can determine his liability to UK tax.
As a firm, we have heavily invested in technology so that we can provide the best service cost effectively and ensure that the correct amount of tax is paid. We have devised a unique piece of software, ‘MFAT’, standing for Mixed Fund Analysis Tool, to help non-UK domiciled individuals identify the make-up of funds they have bought into the UK. This should enable us to correctly complete our client’s tax return and submit it on time.
On that note, the bulge of tax returns are swelling up to explosion point, so must dash as I have no desire for my clients to appear on the top ten terrible excuses for missing tax filing deadline as a result of their tax advisor being too busy writing for economia!
Mike Walker is a tax partner in the Private Client Team at KPMG UK