Will Self–Assessment prove a double-edged sword for the taxpayer?

In its latest report to Parliament, HMRC has confirmed what we already suspected. The gradual adoption of data and digital technology, culminating in the arrival of the self-assessment revolution, may be being dressed up as streamlining and increased efficiency. Is the real motive behind switching the onus of tax return processing onto the taxpayer to leave the role of Revenue staff as one primarily of an inspectorate? In a recent article, Baker Tilly, one of the country’s leading providers of tax services, warns of the likely implications for both individual and corporate taxpayers.


Supermarkets are now adept at introducing new technology such as self-scanning and making it look like customers benefit because the shopper can see his total spend as he goes along and then does not have to queue along with everyone else at a traditional checkout. Nobody ever seems to mention the fact that the supermarket can handle more shoppers with less staff and really only needs one or two personnel to conduct random spot checks to ensure that all items have been scanned correctly.


It is not surprising that tax services professionals have identified a similar trend in the way HMRC is presenting the progressive digitalisation of the tax collection process as “increasing productivity”. Long gone are the days when all the taxpayer or his tax services professional had to do was collate income related figures and submit them to the taxman. Now they have to work out the tax liabilities as well, whereas in the old days the taxman calculated the liability and submitted a demand to individuals and their tax services agents.


It seems all very well for HMRC’s advertising people to claim that “Tax needn’t be taxing” and to portray the online experience as some sort of effortless journey. The truth is that, for many people, the simplicity of self-assessment is a total myth and they usually have to employ a tax services expert to file their returns and calculate their tax liabilities for them.


Specialists in tax services point out that the bottom line is that HMRC are saving time and money by making taxpayers responsible for calculating their own tax which in turn means that it is costing the taxpayer extra time and money. To add salt to the wound, those who find the process relatively straightforward are likely to be higher earning intelligent people while the ones who find it very difficult, or even impossible, are likely to be lower earning, self employed manual workers who have no option other than to employ a tax services professional to do the job for them.


Those whose job it is to provide tax services to the business community caution that the time and cost involved in the new DIY tax regime may be only one side of a double-edged sword and that the corollary of less HMRC staff working on paper processes is more of them working on investigative work, rather like the supermarket employees randomly checking people’s scanned items. It looks very much as though, from now on, taxpayers and the tax services providers that they use will have to be doubly sure that their submissions are immaculate or fear the increased likelihood of an inspection.


If you have concerns about your tax liabilities or any other aspect of UK or overseas tax, contact Baker Tilly’s specialist tax services department. A member of staff will be delighted to discuss your needs.

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