Letter: Tax form loopholes

Share
Related Topics
Sir: I read your article frightening us about late submission of tax returns ("Millions face pounds 100 fines as the taxman closes in", 29 January).

Unfortunately, the Inland Revenue's warnings seem to be rather "the film of the book", the book being the Taxes Management Act 1970, which curiously does not seem to be at the top of any bestseller lists, and the "film", as is so often the case, only following the text of the book fairly loosely.

What the book says, roughly, is this: there is indeed a pounds 100 penalty for submitting the return after 31 January, except that the penalty cannot exceed the tax liability, so that taxpayers who owe no tax (or indeed are due a repayment) will get off paying a penalty completely.

In fact, a large number of taxpayers who complete returns have most of their income taxed at source, and their tax codes take account of any additional tax payable on investments. Even the self-employed might have nothing to worry about. "Liability" means the amount payable after taking into account any payments on account already made. If those payments are at least equal to the final tax bill for the year, again there should be no penalty.

Those of us who are particularly slack at completing returns are especially favoured. Since the Revenue will often have issued such people with punitive tax codes, denying them reliefs they should be entitled to in an attempt to provoke them to get their returns in, those people may well have overpaid tax anyway.

This could be better news than many of us realise. In the panic to get their returns in by 31 January, many taxpayers are likely to have done them wrong. If the returns are rejected, they may count as not submitted on time. So, many of those who think they got their returns in actually haven't!

Am I making all of this up? Unfortunately, the only way to check is to read through the aforementioned non-bestseller. Section 93(7) TMA 1970 is the magic talisman to quote when confronted with a penalty that should go away, along with Section 59B, which defines "liability" so helpfully.

It seems that few people are aware of this get-out, which will probably apply to a large number of the 2 million or so taxpayers who have been lax in getting in their returns. Am I suggesting the Inland Revenue have been unspeakably knavish in deliberately trying to panic the taxpaying public? As if! But the deadline has certainly been putting the frighteners on even the most relaxed of taxpayers - and unnecessarily in many cases.

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Ashdown Group: IT Project Coordinator (Software Development) - Kingston

£45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Ashdown Group: Accountant - London - £48,000 - 12 month FTC

£40000 - £48000 per annum + bonus + benefits: Ashdown Group: International Acc...

Day In a Page

Read Next
 

If I were Prime Minister: I'd shrink the gap between the highest and lowest paid

Marina Warner
 

Sorry Britain, but nobody cares about your little election – try being relevant next time

Emanuel Sidea
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power