Examination of Witnesses (Questions 180
- 199)
MONDAY 22 OCTOBER 2001
SIR NICHOLAS
MONTAGU KCB, MR
DAVID HARTNETT
AND MR
STEPHEN BANYARD
180. What you are saying is if I am a late filer
and you sent me a note on January 2nd that says "You have
not yet filed a return, you should have done. Please pay £100"
and I then do not pay it, and do not pay again after six months,
and you send me another form saying "I want another £100,
you now owe us £200" and I then do not pay it again
for another six months and then finally send you what I owe you,
which perhaps is £10, what then happens?
(Mr Hartnett) Mr Rendel, you are not going to be a
late filer on the 2nd January, I think.
Chairman: That is a minor point. Just try and
answer the point.
Mr Rendel
181. When are you a late filer?
(Mr Hartnett) When you have missed the filing by the
31st January.
Chairman
182. There is no point in nitpicking.
(Mr Hartnett) Sorry, I was just confused.
Mr Rendel
183. Quite right. If you are a late filer on
the 2nd February, and again six months later, and six months after
that when you might be coming up for a determination or whatever
or still have not paid, you then send in your return and prove
you owe £10, you send in a cheque for £10, what happens?
That is it? It is accepted.
(Sir Nicholas Montagu) Yes. Again, as I indicated
earlier, the penalty regime is part of the regime approved by
Parliament. If your debt is less than the penalties then the penalties
are reduced accordingly.[11]
184. I am not saying what you should do except
in so far as you do not apparently chase up the £100 which
is a penalty. The point here seems to be that if actually you
calculated that on January 31st you owe a sum which is less than
£100, you might as well just hang on because you can hang
on to your money, you will never have to pay more than the £10
you have calculated you owe, you may well just hang on to the
money until at some point you come up for a determination.
(Mr Banyard) If you repeatedly do not send your return
in we would have to move to determinations but we will be using
determinations more to get returns in.
185. Will you do that more for somebody who
repeatedly, year after year, does not fill it in or somebody who
does not fill it in once?
(Mr Banyard) If somebody misses two years we will
go to determination and we will then move to the daily penalties.
186. How quickly?
(Mr Banyard) We will move more quickly to daily penalties
than we have in the past.
(Mr Hartnett) There is one other issue here, Mr Rendel,
and it is this. It is our approach to determinations. If someone
in a number of successive years does not file and we are making
determinations then necessarily we will be increasing the amount
of those determinations year on year until we force out the returns.
187. It does seem to me that the point remains
here unless you go to determination for somebody who owes less
than £100 in tax it is actually worth hanging on. They will
not lose any money in the long term by hanging on but there will
be a small amount of interest they can make on that money which
is in their pocket.
(Sir Nicholas Montagu) That is a consequence of the
policy, Mr Rendel.[12]
188. I understand that.
(Sir Nicholas Montagu) It may also account though,
going back to your earlier question, for the fact of late filers
tending to have lower debts, the ones we mentioned earlier, the
taxpayers with substantial liabilities in the previous year.
189. Whether what Parliament asked you for is
not—
(Sir Nicholas Montagu) That other group, the taxpayers
with substantial liabilities in previous years, will be much more
likely to have reduced their current liability by a payment on
account, even if they have not yet filed their return.
190. Can we go on to the four categories given
in 3.13. Have you any idea what the proportion is of each category,
amongst the 900,000 late?
(Sir Nicholas Montagu) No.
191. Can the C&AG give us any idea? No?
Pity. Do we know what proportion are late payers two years running?
How many of the 900,000 in any year are likely to be late payers
in the year after as well?
(Mr Banyard) I am not sure that we can give you that
information but we can let you have a note if we can.[13]
192. I would have thought that would be information
that you yourselves would want. It must give an indication of
how best to overcome that problem. Can we go on to another question.
One of the groups in here is those with no current liabilities.
I can quite understand how that might arise, you might get somebody,
for example, who is earning more than £40,000 and is in super
tax, they retire or lose their job or whatever, there will be
cases where somebody does not have the same need the following
year. Do you have any short cut mechanism for that where instead
of filling in a full form they can just write back and say "Sorry,
I have not got any income this year so there is no point in continuing
on this scheme"?
(Sir Nicholas Montagu) They would simply fill in the
form with zeros and it would be a relatively simple task for them.
193. So you do not have a short cut mechanism
for them?
(Sir Nicholas Montagu) No. Once a return is issued
it does have to be returned to us. If somebody had no income and
notified us and said "Look, I have stopped working as a joiner,
I will not need a form in the future", that would be reflected.
It is illustrative of the numbers that Mr Davies was talking about,
the 900,000 later filers, when he was asking about contact. I
think 15 per cent of them did not get a return because we knew
that it was inappropriate.
194. So if they write back before they get the
form to say they no longer have an income—
(Sir Nicholas Montagu) If they do not need a return
we will not send it to them. Once a return is issued it has to
be sent back to us.
195. Would it not be simpler to have a system
in which you sent out the form and if they write back to you and
say "Actually I have no income this year", that is it,
they do not have to send the form back to you?
(Mr Hartnett) I think if we got a form back saying
"I have no income to return" in a covering letter or
something like that, we would probably do two things. We would
first ask ourselves what the particular individual is going to
live on based on what we already know of them, which seems a particularly
sensible thing to do. Secondly, if that was clear to us and it
was simply "I have no income" I think it is probable
we would accept that in the circumstances as the return sent back
to us.
196. You obviously have not come across such
a case which surprises me, I would have thought quite a few people
would write back and say "Don't be silly, stop sending me
these forms, I have no income". Given that you have not apparently
come across such a case and this is what you think you would do
if you did come across such a case, would it not be sensible to
send out with the form a letter saying "If you have no income,
write back to us and tell us" and that will be the end of
it?
(Mr Hartnett) It is very rare for us to be dealing
with anyone who has no income, literally no income.
197. Income below assessable levels, shall we
say. Somebody might go on to the old age pension, for example.
(Mr Hartnett) Our approach there would be to look
to have the return completed that year and then to take the individual
out of the self assessment for next year.
198. Why do you not just tell them "If
you send back saying `I am now on a pension, I have no assessable
income and I am well below the tax level'" and you might
not have to keep chasing them up. It would save a lot of time.
(Mr Hartnett) I am afraid it is the answer Nick gave
earlier on, that the sending of a return to us once you have been
served with a return is a statutory obligation.
199. So it is something for us to look into?
(Sir Nicholas Montagu) It is indeed.
11 Note by witness: In this example the amount
owing would be £20, and not £10. Ref footnotes to Qs
to 129, 174. Back
12
Ref footnotes to Qs 129, 174, 184. Back
13
Ev, Appendix 1, p29. Back
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