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JOHN T NEWTH FCA, FTII, FIIT, ATT highlights a disturbing development in communications between the Inland Revenue and the taxpaying public.
IN CURRENT PARLANCE we are all now 'customers' of the Inland Revenue. Taxation staff who visit Somerset House for press and other occasions receive a most friendly welcome, along with other guests and visitors for such events.
JOHN T NEWTH FCA, FTII, FIIT, ATT highlights a disturbing development in communications between the Inland Revenue and the taxpaying public.
IN CURRENT PARLANCE we are all now 'customers' of the Inland Revenue. Taxation staff who visit Somerset House for press and other occasions receive a most friendly welcome, along with other guests and visitors for such events.
Other Government initiatives promote a change in ancient relationships between departmental bureaucracies and the taxpaying public. Under Open Government procedures such as the publication of Inland Revenue manuals have taken place. Codes of Practice continue to be issued, and we now have a 'Working Together Initiative', operated jointly by the Revenue and tax professionals.
All this is in addition to the regular meetings between representatives of the professional institutions and the Revenue, which have continued for many years and are evidently very constructive.
All this is laudable, and is clearly intended to demolish the barriers between Inland Revenue staff and taxpayers and their agents which have existed from time immemorial. There is no doubt that, at the highest levels, there is a real desire by senior Inland Revenue officials to promote a more friendly and approachable image. The appointment of Saatchi as its marketing agents is clear proof of this intention.
However, those who work for large bureaucratic organisations know too well how difficult it is for 'the new message' to filter down from the chief executive officer to the thousandth employee. The Revenue is clearly not immune from this problem.
Fairly recently a Taxation reader sent me, unsolicited, what was clearly an extract from an internal Inland Revenue document. Most of the document, which dealt with penalties and interest regarding the form P11D(b), was unremarkable. However, one paragraph highlighted the reason for sending it:
'For the first year only (2000/2001) a 'period of grace' is allowed for late returns. Late returned forms P11D(b) will not attract a penalty if they are filed by 19 September 2001. After this date automatic penalties, at the monthly rate, will be charged back to the due date. There is no concession on interest, which runs from 19 July (2001) regardless.'
It should be remembered that form P11D(b) relates to Class 1A National Insurance contribution benefits, and is an addition to the well-known form P11D, which deals with direct income tax and Class 1 benefits.
The normal final due date for submission of both forms P11D and P11D(b) for 2000-2001 would have been 6 July 2001, so that it is clear that the 'period of grace' referred to an extension of two-and-a-half months for the P11D(b) for one year only.
I received the extract of the Inland Revenue document on 22 June 2001, so that at that date, and presumably before, there was an unpublished concession of which employers and their advisers were not aware. The concession was not mentioned in the Inland Revenue press release of 20 June 2001 entitled 'Help for Employers to Meet National Insurance Deadline'. Around the same time I received verbal information about the existence of the concession from one or two other sources.
A week later I made brief reference to the concession when answering an internet query on Accountingweb's 'Any Answers'. This apparently provoked a flurry of e-mails and telephone calls from anxious accountants.
It appears that direct callers to the Inland Revenue's press office received either an outright denial that the concession existed or were advised to contact individual tax districts. Those who did the latter encountered a variety of responses. Some districts also denied the existence of the concession. One district at least had implemented the concession, and one commented that implementation in its district was voluntary!
Then on 6 July 2001, the very last day for submitting forms P11D and P11D(b) under normal criteria, the concession was made official by the issue of an Inland Revenue press release. This appears to have been issued as an appendix to the press release of 20 June 2001. The relevant extract states:
'For this year only – as this is a new procedure – the Inland Revenue will not impose a penalty until 19 September 2001. Forms returned after that date will have the penalty backdated to the July deadline.'
At least two different constructions can be put on this development. Either it had been the intention not to publicise the concession until the very last minute ab initio, or the Inland Revenue had to react to the publicity and the pressure once 'the cat had been let out of the bag'.
Whatever the truth, the turn of events is not completely satisfactory. Either there was a concession before 22 June 2001 or there was not, and if there was, then employers and their advisers needed to be informed about it.
One is reminded of the 'equitable liability' concession, which existed for many years virtually unknown until it was publicised in Taxation, and was then admitted formally by the Revenue [Tax Bulletin August 1995, under 'Miscellaneous']. Forward contracts with the Revenue were likewise almost State secrets until press reports late last year and subsequent wider publicity in Taxation. With the advent of Open Government one had hoped that such scenarios would no longer arise.
At least this issue has now been clarified by the Inland Revenue, even if at the very eleventh hour. Sadly, this incident did nothing for Open Government and general relationships between the taxpaying public, businesses and tax professionals and the Inland Revenue. One trusts that the Revenue will be more communicative in the future.
