LETTER:Self-assessment: good news or tax by stealth?

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The Independent Online
From Mr Michael Jack, MP

Sir: Your leading article "Hidden cost to the taxpayer" (3 January), about the effects of tax self-assessment, accuses the Government of subterfuge. The fact is that self-assessment is a major modernisation of tax administration. It was fully debated in Parliament in the 1994 and 1995 Finance Bills, when it was actually welcomed in principle by Labour. Since then the changeshave been the subject of a massive consultation and public information exercise, on which all sectors of the business community have been fully and continuously involved.

There will be no hidden taxes. no double tax bills and no tax bombshells. The tax paid by business will be no more and no less than that due on the profits earned. The Red Book does indeed show that there will be an increase in business tax receipts expected in 1998-99. This is because of two factors: rising business profitability and bringing forward the moment when the tax bill has to be paid. However, the self-employed will still have up to 20 months after they have earned the profit to pay their final tax bill, once they receive their tax forms for completion.

Your leading article is plain wrong when it says that self assessment is a job creation scheme for accountants. Tax itself is complicated - we live in a complicated world. But, if businessmen do not want to have to calculate their own tax payments under self-assessment, then they do not have to - the Revenue will do it for them.

In the longer-term, self assessment represents a simplification of the tax system, particularly for the self employed. The new system will do away with endless streams of estimated assessments, appeals, postponements and revised assessments, and will save self-employed businesses up to pounds 250m in terms of compliance costs. It has already been trialed with success on 5,000 real taxpayers in Leicester.

Yours sincerely,

Michael Jack

Financial Secretary

to the Treasury

Treasury Chambers

London, SW1

3 January