Public `clueless' about self-assessment tax system

More than 300,000 people who have returned their self-assessment tax forms have had them sent back because of serious mistakes, according to Inland Revenue figures released yesterday.

The report came as accountants warned that the public remained largely clueless on the self-assessment system of tax, with seven out of 10 people failing to realise they faced a pounds 100 fine if they missed the 31 January deadline.

A survey of self-employed taxpayers, conducted by London-based chartered accountants Levy Gee, suggested more than half of the 3 million who were still to complete their self-assessment had not yet bothered to look at their forms.

Paul Belsman, of Levy Gee's tax division, Taxpro, said: "Ignorance and confusion on such a widespread scale, and so close to deadlines, is a clear indication that the self-assessment message is failing to get through.

"This is bad news for taxpayers. They are more likely to be dealing with Hannibal Hector than cuddly Hector the Tax Inspector, star of the Government's ad campaign, when the Inland Revenue eventually catches up with them."

The 300,000 forms that have been returned by the Inland Revenue represent just 6 per cent of the estimated 5 million forms which were successfully completed for the initial deadline of 31 September this year.

The Revenue had expected 10 per cent to be returned to senders.

However a further 3 million self-employed taxpayers are still to return their forms, with no guarantee that the Revenue will have their assessment ready before 31 January, when the first payment falls due for the tax year 1996/97.

A Revenue spokesman said one-quarter of forms contained cosmetic mistakes but the level of serious mistakes, such as not signing the form or failing to fill in essential pages, was encouraging. "We are smiling, not frowning, at the numbers so far," the spokesman said. "A lot of the 3 million people will be represented by accountants. We always knew they would file late."

Tax advisers are asking for the deadline to be extended by one month in the first year of self-assessment, fearing that too many of the self- employed are delaying filling in their forms until after Christmas.

Gerry Hart, a former president of the Chartered Institute of Taxation, who now heads up Tax Team, the self-assessment consultants, said: "This is a tremendous shift in responsibility from the state to the taxpayer. The problem is that people are already saying, `Forget it, it can't be done until after Christmas'. By filing late, you'll be paying interest on your tax as well as paying a fine."