A point of no returns for the tax man

The Inland Revenue - under pressure from the introduction of self- assessment - is so behind with its correspondence that some offices are "cleansing", or simply throwing away, taxpayers' letters that are deemed "non-essential".

Tax officers who defied the Official Secrets Act to speak to the Independent on Sunday claim that other offices have taken policy decisions not to reply to mail, while delays of up to nine months in answering letters are widespread.

In its own guidelines, the Revenue - which last year spent pounds 17m persuading the self- employed to file their tax returns on time, and which summarily fines those who are late - says that all mail should be answered within 28 days, but the strain imposed by the introduction of self-assessment means that many tax offices, especially those in urban areas, are unable to cope.

The Euston office in London has simply placed a moratorium on all mail not related to the first year of self-assessment. It has not answered correspondence since last July and, according to staff there, no date has been set to clear the backlog - but phonecalls and faxed enquiries are being given priority.

In other offices fax and mail lie unopened for up to three months as staff struggle with the deluge of seven million self- assessed tax returns submitted before the deadline of 31 January. Hammersmith, Hornsey and Bristol tax offices are among those said to be routinely taking 12 weeks to reply to mail.

There are no official figures for delays at individual offices, but one former Revenue employee says that as much as one-third of its mail fails the 28-day rule. The accountancy profession and staff unions are expressing increasing concern over the delays.

A recent survey by the Association of Chartered Certified Accountants (ACCA) revealed that 73 per cent of its members are experiencing delays in having clients' returns processed. "There is a substantial amount of arrears. They are only up-to-date in a minority of offices. Because of the workload, staff have not been able to deal promptly with the majority of taxpayers who are not on self-assessment," said Jim MacAuslan, deputy general secretary of the Public and Commercial Services Union.

He said that the delays are extremely damaging. "They will have serious consequences for the flow of revenue to the Treasury. They are unfair and arbitrary and they undermine faith in the whole tax system."

And he predicted that delays would get worse, not better, as a result of planned reductions in the number of Revenue staff.

Senior accountants have described the delays as "a secret scandal". They claim that the Inland Revenue is concealing the full extent of problems with self-assessments. "The Revenue is naturally putting a gloss on this. And staff are all subject to the Official Secrets Act, while accountants and taxpayers are too frightened of being victimised. There is no one to tell the story," said the head of one top-10 accountancy outfits.

The Inland Revenue, which says that it is responding to 74 per cent of all mail within 28 days, claims "overall things have gone well", adding: " There will always be a few exceptional cases".

But the ACCA survey suggests that the delays are part of a broader range of problems surrounding the introduction of self-assessment. "Taxpayers are paying penalties for late returns when it is the Revenue that is at fault," says Chas Roy-Chowdhury, its senior tax technical officer. "It shows that even experienced revenue staff do not understand the system."

Meanwhile, the Adjudicator's Office which deals with complaints about the Revenue, said that it had investigated only 19 complaints so far, but a spokesman added: "It is too early to say yet how large the problems are. I suspect the worst is to come."