Last minute taxpayers still plague busy season
Batten down the hatches: the January rush is alive and it's as busy as ever. According to HMRC, a week before the self assessment deadline three million taxpayers had still not completed their 2016-2017 returns.
At the start of the year, we asked whether the January rush was a myth. But judging by HMRC's latest tax return figures, our death of busy season pronouncement was premature.
Despite practitioners pleading with clients for the last 20 years and HMRC’s nagging duck campaign, as of last Wednesday, a third of tax returns are left outstanding, with eight million people having filed their 2016 - 2017 tax return.
Confirming that the last minute bottlenecks are still a problem, HMRC reported that last year 840,000 people missed the 31 January deadline. As practitioners are surely aware, taxpayers who don’t make the deadline instead have a £100 penalty to deal with. If that doesn’t jolt taxpayers into action, after three months HMRC imposes an additional daily £10 penalty.
As the laggards wake up to the looming deadline, the AccountingWEB community is still besieged with last-minute client panic. It’s the same story every year: “The first week of January nobody wants to know, the second week clients start to think about it, and then from week three, we see a mad rush,” explained AccountingWEB regular NH. “I have tried for over 15 years to get clients to change but whatever we do, carrot or stick, it is always the same old ones.”
It's human nature
Taxpayers have had 20 years to adjust to the 31 January deadline, so why do so many still leave it until the last minute? “I think it is human nature,” ICAEW deputy president and AC and Mole partner Paul Aplin told AccountingWEB, breaking away from his clients’ tax returns. “There are still a lot of people who instinctively leave it to the last minute and I think they're always going to.”
Frustrated by the same latecomers, AccountingWEB’s Spreadsheet user is even considering adding a deadline clause in a revised engagement letter. “I'm fed up with the same people every sodding January thinking I am sat here twiddling my thumbs and will always squeeze them in,” the member commented.
“You never plan for a significant number of people going off ill, but that's one more danger of leaving it late,” Aplin said, recovering himself from a bout of the flu. “I think if nerves are a bit fraught here it is thinking are we going to have enough people who are going to make it.”
“It's another one of those things you have to factor in again. Maybe you don't have all the time up to the 31st available. There are some things you can't predict.”
Not as bad as it used to be
That’s not to say there isn't some truth to the 'death of the January rush' theory: AccountingWEB member Ireallyshouldknowthisbut’s easier January was the result of sacking most of their late clients and filing tax returns earlier. “We had a very busy October through to December, but Jan is a lot more relaxed. It's more about planning and company work than mucking about with people who have been sat on their hands for 9 and a half months.”
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And practitioners can take solace in the fact that over last 20 years the annual client chasing event has become easier.
“The pressure is still there but at nothing like the level it was back in those first two or three years,” said Aplin, who filed the first electronic tax return in 1997. “We've learned our lessons and the things that arrive late in the day we know to ask for much earlier, and I think the technology is better than it was 20 years ago.”
Prevent next year's stress
As for preventing this from happening next year, Aplin advises practitioners to use the first week of February to review their client lists.
“Have a look at the clients you're dealing with in January and think: 'what was the reason?'. I think there are different reasons for different clients. With som, we were waiting for one item of information or waiting for two items of information.
“I think if you can identify those just make sure early in the new tax year, those are the first things you're asking for.”
Are you still working until the last possible second or are you already thinking about that post-SA holiday?