Danger of diminishing returns: Even if the Inland Revenue fails to send a tax return, the onus is on the taxpayer to come clean

MANY taxpayers, including married women, who ought to have been sent a tax return this year, have not received one.

This should not lull them into a false sense of security. They may think that they do not need to communicate with the Inland Revenue. In fact, they could be sitting on a financial time bomb of unpaid tax, interest and penalties.

They are duty bound to reveal all even if it is the Revenue's fault that a return has not been sent. Since April 1990 eveyone is taxed separately. A husband and wife are individually responsible for completing their own tax returns, declaring all their income, claiming their own tax allowances and reliefs, and paying any tax due.

The Inland Revenue sends out 8 million tax returns. But some accountants say they are concerned that this year there seems to be a growing number who have not received a form. Michael Norrie, a partner with Norrie Stokes & Perrett, a chartered accountant in Tonbridge, Kent, says: 'I have clients from as far afield as Kent and Northumberland who have not received returns who should have done.

'The problem does seem to be worse this year. What particularly concerns me is that many people will not realise it is their duty to give the information to the Inland Revenue regardless of whether they have been sent a return. They could be running up massive tax arrears'.

Mr Norrie is concerned that married women, in particular, may run into trouble. Everywhere you look, the advice is to switch income and assets from a husband to a wife to save tax. As a result a wife mayreceive both income and assets which she unintentionally fails to return to the Inland Revenue.

Moira Elms, a tax partner with Coopers & Lybrand, the chartered accountants, believes that the Inland Revenue has always been remiss about sending tax returns to married women. She noticed that this year 'an awful lot of people have not had returns'.

Miss Elms says: 'It is bad every year for certain groups being missed out, but this year it does seem to be worse. The returns are computer-generated by the Inland Revenue. I am suspicious that whole groupings of people have not received returns.'

Angela Williams is a chartered accountant in Walton-on-Thames, Surrey. She is married and has experienced the Revenue's amnesia first-hand. She has not received her own tax return this year, neither has her mother.

John Keating, tax partner with Chantrey Vellacott, chartered accountants, has been told that the reason for the lack of returns is that certain districts have had computer problems.

But a spokesman for the Inland Revenue denied this. He said: 'We are not aware of any special problems. There may be some people who did not get a return when they should, but our response is that they should tell us and we will send them one'.

A simple enough sentiment, but how do you know whether you ought to have received a return or should now ask for one? Basically you need to complete a tax return if you have something to declare or you want a repayment of tax.

Martin Korn, financial planning partner with Blick Rothenberg, chartered accountants, says: 'The Revenue wants to know about any new sources of income you receive gross: for example, interest, rent, or freelance income.

'You have until 5 April next year if you have not had a tax return, or otherwise there is the October 31 deadline. Even if you have been paid in gold bars you need to declare this income to the Revenue.'

Higher-rate taxpayers will also have to tell the taxman about dividends and bank and building society interest, so that they can pay the additional tax. Any benefits in kind that have not been coded into your Paye coding should be disclosed, for example a bigger car or a holiday on the company.

Mr Korn says: 'Many people who do not have to complete a tax return for income purposes forget completely about capital gains. If they make a capital gain over the pounds 5,800 limit and do not disclose it, the Revenue will be very upset'.

You must file a tax return (or a tax repayment claim) to claim the various allowances, such as age allowance, or the additional personal allowance available to separated or single parents who look after children.

Those 40 per cent taxpayers who pay charitable donations by Gift Aid or a charitable deed of covenant will need to complete tax returns to claw back the balance of their tax relief above 25 per cent. The same may apply to those paying personal pension premiums and free-standing Additional Voluntary Contributions.

The moral of the story is that it is always sensible to err on the side of caution. You may even find that after completing the form, the taxman owes you money.