Days to go, and the taxman rubs his hands

If you have avoided filling in your tax return for 1996/97, then you can do so no longer. If it is not completed by 31 January you will be fined. And fined. And fined. Guy Dennis gives last-minute guidance on how to avoid the taxman's sting.

"It shouldn't take that long. I would say no more than half an hour to complete it - to do the whole thing." That is what the Inland Revenue tells most people when they phone its tax-return help line. In reality things may not be so simple.

If you are among the three million yet to complete their tax returns, then doing so should be your top financial priority. Despite calls for an amnesty from the public, the press and accountants, the Inland Revenue insists it will fine those who do not meet the end-of-January deadline for the forms to be sent in. Offenders will be fined pounds 100 again if they do not complete their forms by June.

Those who have completed the form must pay their tax bills by the end of the month. The tax man will charge interest at 9 per cent on unpaid bills. After 28 February there is an additional surcharge of 5 per cent. The Revenue is expected to gain pounds 100m from these fines.

So, with fines and surcharges potentially mounting at an alarming rate, what should you do?

To fill in your form you need your financial records from 6 April 1996 to 5 April 1997, including a P60 from your employer detailing your income. Financial institutions may be able to help by giving information over the phone. You should also check that your form has no pages missing; if pages are missing, call the Inland Revenue on 0645 000 404 for a fresh set.

Complete the form carefully: if you make a mistake your form may be returned, and you could still be fined pounds 100 if you cannot correct and return it in time. Do not hesitate to use the Inland Revenue's assessment help line on 0645 000 444 - it is open until 10pm, seven days a week. If you are really pressed for time, you may want to err on the side of caution when calculating your tax liabilities.

If you pay too much now, you can get a rebate later. The interest paid on your rebate will not be competitive, and you may have to chase it up, but you will buy time if you really need it, and avoid the fine.

The self-employed, small partnerships and those with high investment incomes are likely to have the greatest difficulties with self-assessment. Areas such as business expenses could create substantial problems, especially if the self-employed choose to complete their own tax returns.

Even some accountants may have problems, however. Some are being snowed under as the deadline approaches, and they accepting that for some clients, the fine will have to be met. Just who pays if the accountant has not filed in time depends on whose fault it was. If, despite warnings, you have supplied incomplete or incorrect records and have taken up most of the past few months doing so, the chances are that your tax adviser will refuse to pay up on your behalf.

Having dealt with your form and paid, you should not dispense with your records. One in every 1,000 tax-payers have already been randomly selected for inspection by the Inland Revenue, in secret. The Inland Revenue will also come back to you if they think your self-assessment is incorrect.

Even if you have sent in your form and paid the bill, accountants warn of further tax time-bombs waiting to explode. "From the 1996/97 tax year onwards, the fact that they've sent you a bill doesn't mean that they accept or reject your return," explains Richard Hewson, a chartered accountant in London who deals with small companies and individuals. The tax man can inspect you and bill you for more.

Private individuals need to keep records for the 1996-97 year for three years, until 31 January 2000, in case of inspection. The self-employed need to keep them for six years. If you are inspected, acceptance of your original payment will not guarantee that your form was correct.

Accountants agree that there is rarely any joy in the world of late tax returns. But one rumour may still be of interest. As the deadline approaches an avalanche of tax returns will be sent in to the Inland Revenue. That has led some to believe that forms returned at the last minute will be scrutinised less closely.

Rayner Peett, a spokesman for Ernst and Young, says that is "a distinct possibility, but definitely not guaranteed". He says Ernst and Young have not followed that strategy - unless their clients instructed them to. In any event, the Inland Revenue strenuously denies the truth of the rumour.

What is clear is that one aim of the new-style forms, that of cutting costs and Inland Revenue staff numbers, may not be achieved so easily.

"We have an overall down-sizing of staff taking place over a number of years but there isn't an immediate cut-back because there will still be staff needed for checking the returns later and all that sort of thing," a spokeswoman at the Inland Revenue says.