TAX OPINION: On changes to the filing deadline. By Simon Sweetman
While the accountancy profession exhibit collective horror over Lord Carter's recommendation that the filing dates for income tax self assessment should be changed, ordinary taxpayers seem unmoved.
You might argue that this is a proposal based more on our being out of line with the rest of the world than on any perceived difficulties with the present system. There is no reason to suppose that HMRC wanted the changes, so it all seems a bit unnecessary, hence accountants' objections. But for most self assessment taxpayers this is not going to make a lot of difference, although it changes the emphasis for many of the self employed in that it makes a 31 March year end less attractive.
So if accountants were going to be upset anyway, why not be seriously radical? The feature of the UK tax system that is really out of line with most of the world is that the tax year runs to 5 April.
And unlike the time given to complete a return, this does make a difference. An increasing number of taxpayers every year are working receiving pay in one country while resident in another, or possibly in both; or owning property abroad, and having to offset foreign tax against their UK tax liability. Almost everywhere the reference year for tax purposes is the calendar year, so if that was true for the UK then it would make calculations much simpler. When you go to work out the double tax relief available you often have to look for the tax charged on the same income; where the reference year is different that is a wholly unnecessary complication.
The fact that the tax year ends on 5 April is perculiarly British, along with warm beer and village duckponds. It is a hangover from 1752, when rents due on the quarter day on March 25 had to be delayed when we changed to the Gregorian calendar. Originally, the fiscal year ran to 25 March because that was the Roman new year, going back to the logical notion that the year began with the coming of spring.
But this change seems to be too awful for anyone to contemplate, like deciding to change to driving on the right. But is it? It makes no significant different to companies or to event-based taxes, and, effectively, we are only talking about income tax. There is even a precedent, in that Ireland, having inherited 5 April, managed to make the change without too much trauma.
I know that taxpayers do not want change, but that really means is unnecessary change - the sort of meddling in which a relieving measure is introduced in one year and then withdrawn two years later without notice. If we could change to the calendar year, then there will be no need to change ever again. As the world of work gets smaller and e-commerce develops, we are going to have to do this one day.
I realise that the accountancy profession will make the sort of fuss which would be appropriate if the Chancellor announced that he was going to shoot one in ten tax agents pour encourager les autres, and the Daily Mail will spot a European plot to undermine us and make us pay our tax in Euros. It is hard to see, though, how the rational among us could object.