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CIOT Joins Chorus Protesting Complexity Of Tax Forms

by Jason Gorringe,, London

10 May 2007

The Chartered Institute of Taxation (CIOT) has joined the growing chorus of voices calling for the UK's self-assessment tax regime to be simplified, after research commissioned on behalf of CIOT and published this week, revealed that a third of UK taxpayers find the self-assessment (SA) forms difficult to complete.

HM Revenue & Customs (HMRC) issue two tax calculation guides to assist taxpayers. However, both of these are also complicated, the CIOT has argued.

John Cullinane, CIOT President, observed that:

“The forms and guides reflect how complex the UK tax system is. In order to simplify the SA forms and guides one first needs to make the system simpler and clearer. Without this any move to making the forms ‘easier’ could in fact lead to people getting their tax return wrong.”

The research found that 67% of taxpayers polled complete the form themselves. 42% said they found it ‘very’ or ‘fairly’ difficult to understand whether they are paying the right amount of tax.

John Cullinane added:

“The CIOT welcomes the acknowledgment in the Budget of the need for simplification. We believe that HM Treasury and HMRC understand this and we wish to continue working with them to achieve this.”

The poll also showed that:

  • 74% of those questioned pay their taxes through their employer.
  • 89% of people who were polled thought that the tax system should be simplified.
  • Just under half a million taxpayers (7%) failed to submit their self-assessment tax form on time.

Meanwhile, in a report published late last month, the UK's National Audit Office (NAO) suggested that HM Revenue & Customs could be doing more to assist taxpayers in understanding and completing their - increasingly complex - tax returns.

The report argued that making forms and guidance easier to obtain and understand should help to reduce the unintentional errors by taxpayers and result in more accurate tax assessments. It also proposed improvements, which build on changes already introduced.

The NAO report suggested that the UK tax authority could make it easier for taxpayers to find the forms and information they need, including improving the specialist help available to people with disabilities or whose first language is not English. HM Revenue & Customs is reported to already be considering plans to improve its website, taking account of a recent cross-government review on transforming delivery of public services.

The review additionally identified scope for substantial savings across government from improving telephone contact centre operations and making the web the primary source for all simple information and advice.

According to the NAO:

"HM Revenue & Customs has improved its forms and guidance by introducing shorter forms for people with simple tax affairs and simplifying tax statements and other information. However, the NAO found that some guidance requires a reading age of 16 to 17 years old to understand, whereas less than half the adult population reach this level."

"The Department’s monitoring of the quality of telephone call handling shows it provides complete and correct advice to taxpayers on 94% of calls. It also has arrangements for ensuring forms and guidance are kept up to date, and to check advice provided at enquiry centres. Today’s report nevertheless identified some examples of out-of-date leaflets and incorrect or incomplete advice by telephone contact and enquiry centres."

"The Department could build on the improvements made to help taxpayers find and understand the information they need and reduce the level of unintentional errors they make. Recent work by the Department suggests that unintentional errors by taxpayers in completing their Income Tax forms results in over GBP300 million in underpaid tax. It has no corresponding estimate of the amount of tax overpaid by individual taxpayers."

Recommendations made by the NAO in its report included:

  • Redesigning the Department’s website to make information more accessible;
  • Advertising contact details and services more widely including those for people with disabilities;
  • Exploring the possibility of a single telephone orderline for guidance; and
  • Continuing to reduce the time taken to answer calls; and developing methods for assessing the quality of face to face advice.

The NAO also suggested that the Department should identify the main types of error that taxpayers make and where they do not understand their tax obligations, in order to inform the redesign of forms and guidance and alert taxpayers where particular care is needed.

Head of the National Audit Office, Sir John Bourn observed that:

"Tax can be a complicated matter so it is important to make it as easy as possible for taxpayers to understand and comply with their tax obligations. My report shows how forms and guidance can be made more accessible and the importance of grasping opportunities to simplify the complex rules and procedures."

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