Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 180 - 199)



  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.


  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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