A solution to the tax return blues

Why does it always rain on me?
istock_gruizza
Share this content

As we enter the last two weeks in January, anyone with responsibility for completing tax returns is probably considering murdering a good proportion of their clients.

I am aware that those under the cosh will not have time to read this article but at the very least, they should save it for a rainy day. Alternatively, colleagues might wish to share the contents some time in February.

As with all aspects of life, some people are efficient but far more leave everything until the last minute. While this might be your own inclination, when clients vie with each other for the honour of which will send in their tax return information latest, it is infuriating and could easily induce neurosis or even a heart attack.

This is a topic that has been debated at length on an annual basis ever since the tax return deadline of January 31 was first imposed. It is not a uniquely British problem, although the dates vary from country to country.

On the assumption that the Chancellor of the Exchequer has more significant problems to deal with (ie the national debt) than frustrations for accountants, we need to find our own solutions.

As this columnist has repeatedly suggested in past years, accountants are far too willing to accept what is basically bad behaviour on behalf of so many of their clients. The obvious answer is to set a deadline after which you will not guarantee that tax returns are completed on time. Many try this but few are willing to go through with the very obvious result after the deadline has been ignored.

In most cases, the only real consequence for the dilatory is a relatively small fine from HMRC, although the window for review also extends. That being the case, maybe it is time to persuade lazy clients that they should accept this small penalty for the delay.

From the perspective of an accountant, the consequence can be far more damaging. Over the years, many accountants and their staff members have made silly mistakes, working flat out around the clock in the last few days of January, that would never have occurred a month or two before. This can lead to anger, the loss of a client or in some cases a substantial claim for legal redress.

Having rehashed all of that, this accountant has then tried to apply logic borrowed from two different sources on his recent jaunt to New York.

Both airlines and Broadway theatres have recently begun to use technology as a means of imposing dynamic pricing structures. Basically, they increase or reduce the price depending upon the value of the product that they are offering to the purchaser at any particular time.

This means that if Springsteen on Broadway is completely sold out, the top price ticket can go up to $875. On the other hand, if another show is almost empty, then mysteriously the number of premium seats will reduce and certain subscription websites might have the opportunity of offering bargain deals at as little as $3 apiece.

It is about time that accountants started to use similar principles and, if necessary, software. This might be as simple as having a sliding scale for completing tax returns depending on the date when the final piece of information (or the bulk) is delivered.

A simple example might help. Assume that the client sends their tax return information in today (17 January) and the return would usually cost £1,000 to complete. They could be offered four simple options.

  1. Completion by the end of the week for £4,000.
  2. Completion by 31 January for £2,500.
  3. Completion by 28 February for £1,000.
  4. Completion by 30 April for £500.

Something even more sophisticated could also operate but the general idea has to be that clients who make life easy for us benefit from doing so, while the ones who are particularly awkward pay generously for the privilege, effectively compensating practices and their hard-working tax staff for the unnecessary unpleasantness that everyone is currently enduring.

About Philip Fisher

Replies

Please login or register to join the discussion.

23rd Jan 2018 21:14

Why would anyone agree to pay £3,000 more (£4,000 less £1,000) to have their tax return done by 28 February when the fine is only £100!

You can then pay the tax same day before the 5% surcharge arises on 1 March.

Thanks (0)
avatar
24th Jan 2018 11:30

But the accountant is no longer under pressure to complete the return by 31 January and the client (hopefully) learns next year to get the information to the accountant by the end of October, pay the £1000 fee and no penalty. I have used differential pricing for a while now and it works on the majority of cases which means I can deal with the persistent latecomers without stress.

Thanks (0)