Money: Taxman prepares to fine 1.5 million as deadline looms

Up to 1.5 million people face fines for failing to complete the new-style tax self-assessment forms in time. Louise Jury says the stress of filling in the boxes even forced one taxpayer in West Yorkshire to call the Samaritans.

Almost one in five taxpayers have not returned the Inland Revenue's new forms, only weeks before the 31 January deadline. A MORI survey indicates the tax man is awaiting returns from 1.7 million taxpayers, 42 per cent of whom say they have not got around to filling them in.

Another 16 per cent say they are having difficulty and are awaiting help. Those failing to return the forms in time face an immediate pounds 100 fine and the possibility of investigation - bringing in millions of pounds in penalties. Interest on tax owed will be 9.5 per cent from that date and a surcharge of 5 per cent will be imposed on anyone who still has not paid by 28 February. Anyone failing to make their return by 31 July faces a second pounds 100 fine.

Although most people found the forms easy to fill in, problems were evident from 300,000 returns rejected by the Revenue already for "serious errors or omissions".

Anita Monteith, chairman of the Institute of Chartered Accountants in England and Wales (ICAEW), which commissioned the survey, said: "This is a new and complicated tax regime, causing massive problems to taxpayers.

"There are obviously many people out there who need specialist advice and are unsure where to turn for help. Some have had to resort to family and friends, which is not ideal." The ICAEW found that of those who had returned their forms, more than a third had had difficulties completing them and half sought advice.

The most common source of advice was a chartered accountant but this still accounted for only 28 per cent. Many turned to family and friends and 3 per cent or less went to their employer or to a bank or building society.

The South-west of England had the most taxpayers who completed the form with ease, with the Welsh, followed by those in Yorkshire and Humberside, finding it the most difficult. Londoners were most likely to seek advice.

Richard Shooter, a self- assessment expert from aLeicester firm, called for the pounds 100 fine and interest charges to be deferred to the end of March to give people more time to sort out problems. But an IR spokesman said: "People will be aware of the importance of the January deadline and we are aiming to get every return back next month." They were delighted by many of the survey's findings, he said. A majority of people who had completed their tax forms had found them easy to complete. Michael Jack, financial secretary to the Treasury, predicted after a pilot study in Leicester in 1996 that at least 15 per cent of taxpayers would be fined at least pounds 100, adding up to nearly pounds 150m. The forms went out in April to 9 million high earners, people who are self-employed and those with more than one source of income.