Hidden dangers in the taxman's charm offensive

The Revenue insists the new tax forms are easy-peasy. But make sure you read them carefully, advises Clifford German
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"Probably ... the best tax form in the world", says the Inland Revenue, diffidently taking a leaf out of Carling lager's book.

Accountants like Grant Thornton continue to warn taxpayers of the hidden dangers of failing to keep adequate records for up to five years, failing to understand the new tax forms which will be sent out as soon as the new system of self-assessment starts in earnest next April, failing to respond quickly and accurately, and failing to meet the different payment dates for tax on income from different sources.

Transitional rules on income from self-employment also threaten to confuse. But the Inland Revenue's own charm offensive continues remorselessly to reassure taxpayers that so long as they keep the necessary records, filling in the new user-friendly forms will be as easy as pie.

The truth lies somewhere inbetween. The new forms are couched in straightforward language, the paragraphs are grouped and sectioned in numbers, 10.1, followed by 10.2 etc, and start with an explanatory sentence followed by a series of questions which require the answers Yes or No.

Only one person in three, and only one pensioner in 10, will get a form, and four people out of five will get a shorter form than now or at least one no longer than now, eight to 12 pages on average.

Filling in the form accurately is mandatory, actually calculating your own tax liability remains optional, although to do so you will need to keep your coding notices to know how much unpaid tax you may owe from earlier years and how much has been allowed for in your current code.

Either way there are new-style guides to help you through the tax form step-by-step.

rTax evaders are advised to make a full confession or criminal proceedings will be inevitable, claim accountants Moores Rowland. Recent changes have given the Inland Revenue better resources to mount prosecutions and the courts now take a much tougher view of tax evasion.

For example, a company director in 1990 got six months for passing false invoices worth pounds 250,000 through the company books. In 1996 a businessman got two and half years for failing to reveal a pounds 50,000 liability.

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