01.02.08 ELECTRONIC FILING DEADLINE IS EXTENDED BY 24 HOURS

The taxman was forced to turn his giant egg-timer on its head yesterday after a computer crash left thousands of people unable to file their tax returns on time.

HM Revenue & Customs has spent thousands of pounds on a TV advertising campaign, featuring an egg-timer, warning taxpayers they faced a £100 fine if they didn't meet last nights midnight deadline. But they had to extend the deadline by 24 hours after problems with its website left people unable to get through.

An HMRC spokesman said a record 3.6 million taxpayers had already successfully filed online, with 104,000 filing yesterday before the system went down at 10.30am. Based on last year's returns a further 46,000 were expected to have left it to the last day.

Already smarting from the loss of computer discs carrying a huge store of personal information HMRC got another mauling yesterday from politicians and taxpayers' campaigners.

Bruce Wilson, head of tax at Scottish accountants Campbell Dallas, said:"from a government that is committed to forcing us to file returns by electronic means this is inexcusable.  We already have the situation where companies have to file pension returns electronically - there is no provision for making written returns - so this problem could get worse in the future".

The firm had already encountered a major problem last year when they filed a large batch of payroll returns.

His colleague, Jim Campbell said: each year every employer has to retuen a P35 - summary of personal tax and national insurance of all employees for a year.  In April 2007 all the P35s prepared by Campbell Dallas were filed electronically.  Around six months later dozens of fines appeared in our post.

"This was because the Inland Revenue said they had not received the forms on time,despite the fact the returns were filed electronically and receipts were issued.  The only way our clients were allowed out of the fines, which ran in most cases to hundreds of pounds, was to provide a written appeal setting out the circumstances despite the fact that the error was on the part of the Inland Revenue.

"This has happened on so many occassions.  There is just such crass incompetence. We have been reading in the papers recently about politicians making innocent mistakes over their campaign donations and allowances.

"Sadly an innocent mistake does not wash with all branches of government - indeed where the Inland Revenue is concerned, there is no such thing as an 'innocent' mistake".

Liberal Democrat treasury spokesman Vince Cable said: "Why should anyone have faith
in HMRC?  This is an institution which pays almost three million tax credit claims incorrectly each year, has lost 25 million people's personal records, and now is apparently incapable of keeping its website up and running on the day tax returns are due.

"It is worrying that an organisation responsible for collecting half a trillion pounds of taxpayers' money can't keep its own website online".

Shadow chief secretary to the Treasury, Philip Hammond said: "When will Alistair Darling get a grip?  He's happy to threaten taxpayers with £100 fines if they don't send in their tax returns on time, but he can't even provide them with the basic tools to do the job.

Alan MacDermid
Publication:  The Herald
Date:February 1st  2008