UK Public Spending Watchdog To Examine Self Assessment System

by Robert Lee, Tax-News.com, London

30 July 2004

The UK’s public spending watchdog, the National Audit Office, has initiated an inquiry into the Inland Revenue’s self-assessment system which could lead to heavier fines being handed out to taxpayers missing the tax filing deadline.

The NAO is apparently concerned that the Revenue is not doing enough to close the £14 billion tax gap in uncollected taxes, around £4.5 billion of which was calculated through the self-assessment system, according to the Financial Times.

Whilst the inquiry is not part of the Treasury’s wider crusade against tax avoidance, observers believe that the NAO is likely to recommend that the Revenue uses its power to impose fines of up to £60 per day on taxpayers who miss the January 31 deadline.

Since the self-assessment system was introduced in 1996, the number missing this deadline has remained steady at around 900,000 per year.

The inquiry will also examine how the Revenue selects taxpayers for self-assessment and whether the system is too complex, given that around 30% of self-assessment forms are completed inaccurately.

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