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The Revenue has accepted that a taxpayer has made a return where he has used a provisional or estimated figure. So it seems that Robert Maas's efforts were not in vain; see 'The Appeal That Never Was' by Robert Maas, Taxation, 8 November 2001, pages 131 to 132. It has taken just over three months for the Revenue to reach this decision, and for many practitioners preparing clients' 2000-2001 tax returns it will be too late, as the announcement comes just seven days before the 31 January deadline.
The Revenue has accepted that a taxpayer has made a return where he has used a provisional or estimated figure. So it seems that Robert Maas's efforts were not in vain; see 'The Appeal That Never Was' by Robert Maas, Taxation, 8 November 2001, pages 131 to 132. It has taken just over three months for the Revenue to reach this decision, and for many practitioners preparing clients' 2000-2001 tax returns it will be too late, as the announcement comes just seven days before the 31 January deadline.
The article explaining the Revenue's position, which will be included in the February 2002 Tax Bulletin issue 57, is paraphrased below.
Following an appeal against a late filing penalty, the Revenue has sought further legal advice about the use of provisional figures. As a result of that advice, on 23 October 2001, it changed guidance to staff on how to handle income tax self assessment returns containing provisional figures or corporation tax self assessment returns containing estimated figures.
The Revenue now accepts that a taxpayer has made a return (assuming there are no other problems) where he has used a provisional or estimated figure. It will no longer send back a return that does not have an adequate explanation for why provisional or estimated figures are needed or does not give a date for the supply of final figures. The omission of that information will, however, be a factor taken into account in order to decide whether it needs to open an enquiry into the return.
Past Revenue practice on provisional or estimated figures was based on earlier legal advice and understanding of the law. Any resulting late filing penalties charged before 23 October 2001 were therefore correctly charged in the view of the Revenue. We await the forthcoming Tax Bulletin for more information about how the Revenue considers that a prevailing practice rule applies in these circumstances.
It is possible for the use of provisional or estimated figures to result in an incorrect return for which a penalty may be charged. This can be because the taxpayer did not take reasonable care when calculating the figures or because final figures could have been obtained before the return was sent to the Revenue.
The Revenue will look at the changes it can usefully make to the wording about provisional or estimated figures in income tax and corporation tax self-assessment returns for 2003 onwards.
