Accountants cash in on `tax terror'

In 8 million households across the country, a new terror in pale blue plastic will land on the hallway mat next week. It is the new Inland Revenue self-assessment tax return.

Even as the taxmen were repeating their mantra yesterday that the revised form is simpler and, for most people, shorter, critics were claiming the new system will cause confusion and delays.

Only one thing looks certain: accountants should be on to a winner, and the Institute of Chartered Accountants has launched a campaign to encourage taxpayers to seek professional advice .

The aim when the Inland Revenue set about re-designing the system three years ago was greater efficiency for them and easier-to-understand forms for the millions of self-employed, company directors, business partners, high-rate taxpayers and some pensioners who have to fill one in.

A revenue spokeswoman said: "It is much more straightforward than the old forms. We're not being complacent, but if you sit down and read it, it will be clear."

The number of people affected has actually decreased by up to 1 million as a result of the overhaul.

For those who receive a form, if it is returned by 31 September, the revenue will work out the tax for you. Anyone who wants to do it themselves has until the end of January.

An automatic penalty of pounds 100 has been introduced for forms returned late and there are surcharges in addition to interest on any late tax. Up to pounds 3,000 can be levied for not keeping proper records.

The Institute of Chartered Accountants said it was concerned that many taxpayers would not be able to understand the form and that new powers of investigation were "confrontational and unfair".

A spokesman, said: "There's a danger of the system coming into disrepute because I'm not confident that the people in the districts are getting the back-up they really need to help taxpayers [with queries]."

Jonathan Bruce, of Ernst and Young, said taxpayers could not afford to ignore the form because of the penalties.

He believed the revenue was encouraging people to send in their forms for it to assess because it did not believe people could get them right - and if they did not, figures would have to be amended and efficiency savings lost. But if they did send in their forms, they had to trust the taxman

Only 4.5 million of those taxpayers currently receiving forms employed accountants, he added. When self-assessment was introduced in Australia, the proportion rose from 20 per cent to 80 per cent.

John Whiting of the Chartered Institute of Taxation said people should not panic.

"If you've really got simple affairs and if you're prepared to take time, you shouldn't need an adviser.

"Anyone who feels they need a fiscal health-check should be thinking of getting advice."

Moira Elms, of Coopers and Lybrand, said in two or three years' time people would probably feel self-assessment had been a change for the better. "But this year people have got to take time to understand it."

Some parts were more difficult. In the past, for example, a taxpayer might have referred the revenue to information the employer had to provide. Now this had to be provided on the taxpayer's own form.

Clear English - but taxpapers more confused than ever

Although the new forms are hailed as breaking the mould with clear English and nifty colour coding directions, the self-employed of Stratford, east London said yesterday that they are more confused than ever before about paying tax, writes Nicole Veash.

Trevor Waterworth, a builder, said: "I was all set to do my own tax and save a bit of money with the accountancy fees. But having seen this form I am definitely having second thoughts ...

"This one is so huge and complicated that I know I'm going to have to fork out extra for the accountant. I wish the Inland Revenue would make a real effort to make their forms easy to understand."

Lizzy Alchy, owner of Unique Shoes, said: "I've always found tax returns complicated but this one is completely out of my league. I'm not looking forward to filling it in. They definitely penalise small businesses who can't afford to pay expensive accountants."

Painting and decorating partners George Carter and Michael Phillips have been doing their own tax returns for years, and Mr Phillips said: "I think this form is much more intrusive than the other form because they ask for more information about you. At the moment there are loads of sections that are not related to us ... and it just makes it so much more confusing."