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Delay is preferable to error


Mottos, proverbs, sayings, whatever you want to call them, have stood the test of time and most of them would serve most of us very well most of the time. My grandfather, a joiner by trade, would receive calendars each year from his suppliers. My favourite was the one that sat on his bench. You tore a sheet off the front each day to reveal today's date and, better than that, a new thought for the day. I have not seen one of these for a while but I guess they are still out there. The modern equivalent is the "fortune cookie" which pops up on your computer screen each morning. The medium of communication should not be of importance but, somehow, it's not the same.

I came upon a quote the other day, "Delay is preferable to error," attributed to Thomas Jefferson. In everyday life I would wholeheartedly agree. However, as "delay" and "error" are words I encounter daily in my work, I donned my tax hat and began to question how well this motto would serve the tax adviser. Unfortunately, under the self-assessment regime, neither delay nor error is acceptable.

If you delay submitting your tax return beyond 30th September you will have to prepare your own 32 page tax calculation and will miss the opportunity to have any underpayments collected through the PAYE system. If you delay beyond 31st January you will be charged a penalty. If you delay paying your tax on time, interest and surcharges will apply. So, delay is certainly not advisable, but is it preferable to error? It must be: it is well backed up. If it's good enough for Herodotus (459 BC), "Haste in every business brings failure," it's good enough for me.

Or is it? What about, "He who hesitates is lost"? This starts to sow some seeds of doubt. Realistically, it depends on the size of the error and, more importantly, whether or not it is discovered! If it is discovered, the Inland Revenue will charge interest on any unpaid tax and can charge a penalty equal to the tax lost although this will normally be reduced in cases of genuine error. If it is not discovered, nobody will ever know that an error was made and your haste will have been rewarded. On balance, the maxim just about stands scrutiny.

This thought process led me to look at some other quotations from a tax viewpoint. Harry Weinberger (1917) said, "The greatest right in the world is the right to be wrong." Try arguing this point with the Commissioners of the Inland Revenue when you have incorrectly applied indexation allowance and taper relief to your unapproved share options and see how far it gets you.

Here's another good one, "Innocence has nothing to dread," Jean Racine (1677). You may have a different view if you have just been subjected to a 12 month investigation by the Inland Revenue which cost you over 1,000 in accountancy fees and revealed that your tax affairs were perfectly in order!

Obviously, the best advice would be to avoid both delay and error. Start your tax return early and give yourself plenty of time to get it right before submitting it in September. If you can not cope, appoint a tax professional to handle things for you. If you fear an Inland Revenue investigation, insure yourself against the costs of dealing with it. But will you do it? Unlikely. In the words of Joseph Addison (1711), "There is nothing we receive with so much reluctance as advice."

But you should. If you have not started dealing with your tax return for last year yet, do it now. "It's better late than never." Leave it much longer and you will be too late and, "There's no use in crying over spilt milk." That is why I am advising you now: the Danish proverb, "Advice after injury is like medicine after death," is, "Probably the best proverb in the world."

For more help and information visit
www.ietaxguard.co.uk

May 2001

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