Tax chaos leaves claims 'on hold'

Thousands of people will experience delays in resolving outstanding tax matters as a result of the chaos over the introduction of self-assessment, tax experts have warned.

They believe Inland Revenue staff have put all claims over previous years "on hold" while they struggle to introduce the new system, which will affect 8.5 million self-employed and higher-rate taxpayers from this tax year, which ends on 4 April.

Mike Warburton, senior tax partner at accountancy firm Grant Thornton, said some matters "have been outstanding for over a year" and were unlikely to be resolved in the next 12 months. He cited errors in the posting of statements of account to self-assessment taxpayers, and faults in the standard calculations used on the new forms, as evidence of difficulties within the Revenue in getting to grips with the new system.

A former tax inspector said he had been told by old colleagues at the Revenue that staff were "close to breaking point". He added that inspectors were blaming job cuts pushed through by the Government in anticipation of the reduced tax-collecting workload after self-assessment.

However, the Revenue denied any delays would occur as a result of self- assessment. "We do not recognise that anything has been put on hold," a spokesman said.

This view was given qualified backing by John Whiting, chairman of the Chartered Institute of Taxation's technical committee. "I have not seen any evidence of matters held over. In fact, there has been a strong effort to clear up outstanding matters quickly," he said. "But clearly there is a huge burden on the Revenue at the moment, and I am sure they are not coping 100 per cent."

Both Mr Warburton and Mr Whiting said the Revenue's struggles will be as nothing compared to those of people receiving their new tax forms next week. These will include a new basic tax form, plus up to nine different "schedules" depending on the nature of a person's income. Taxpayers can then choose whether to let the Revenue work out the tax payable, or calculate it themselves.