Self-assessment return blues

Self-assessment return blues

I’m not sure how much HMRC spend on advertising in order to cajole taxpayers to remember the 31 January filing deadline. Each year we are subjected to a slightly different approach advert. Apparently according to the promotion this year, if you file your return life becomes so easy! You never need to worry again!

As an accountant, I obviously have a passing interest in the question of filing self-assessment returns.¬† There are some of my clients (you know who you are!) who in the middle of January still needed to forward their details.¬† We send out letter starting in April (when taxes are due in January), but it always seems to come down to the wire, doesn’t it?

On a purely unscientific basis, from discussions with clients and others it seems that the blandishments of HMRC fall on deaf ears. They keep strongly encouraging small businesses to sort out their taxes early, and many business owners simply wait until the 31st of January.  (One would hope that HMRC do have figures supporting the positive result of what must be some considerable expenditure on their encouragements to file early!)

The Psychology of Taxpayers Who Wait Until The Last Minute

What interests me more is the psychology around the failure of taxpayers to complete returns.  I see three categories:

Taxpayers Who Are Too Busy

There are those of us who have every good intention of carrying out a task but there always seems to be something else more important that needs to be done. These tend to be the taxpayers that will appear at the 11th hour (or even later!) and expect their return to be completed within the time limit.

Taxpayers Who Live In Fear

Certain taxpayers, just freeze even when requested to assemble the data for their tax returns. I always remember a client who asked me to meet with his brother who was facing considerable difficulties with his tax affairs. I met with the brother, who had a very senior position in a private limited company. He related to me that bailiffs representing HMRC had turned up at his home demanding payment of somewhere in the order of £20,000. His wife had to face the bailiffs, and had given him an ultimatum either to sort his tax affairs out or she was leaving! He appeared at my office with a box of correspondence from the Revenue. His inability to deal with the Revenue was to such an extent that none of the letters that he brought along had actually been opened. After going through the correspondence we found a cheque from the revenue to the client which was three times the size of the debt the revenue were trying to collect from him! We did have the minor problem that the cheque was out of date, so we had to apply for a new cheque to be issued, but you can see how stressful this situation was, and how it could have been avoided.

This isn’t an everyday common occurrence but it does illustrate that even someone that was a Board Director and responsible for an enormous budget and staff struggled to deal with what many of us would see something quite straightforward. This story has proved very useful over the years, to reassure nervous clients of mine that they are not alone in their concerns of dealing with the revenue.

Taxpayers Who Just Ignore Their Taxes

Of course there is the last class of taxpayer who has failed to file their return.¬† Often they believe if they don’t do anything, somehow they will be forgotten about. I’ve had a number of clients over the years with this type of approach who we have had to show the door. In my experience and observations, often these taxpayers can get away from dealing with the Revenue for many many years….but it must be dealt with eventually.

So, how do you make your 2015-16 tax year better?

Having said all of this, it’s tempting to think we will still have self-assessment return blues next year.¬† But you don’t have to.¬† Remember that being too busy, too fearful, or just ignoring the problem are not the way to avoid the blues.¬† Talking to us as soon as possible after April 2015 will make your life so much easier – and you might even find that you go through January 2016 without any blues at all.