§ Mr. Mike O'BrienTo ask the Chancellor of the Exchequer what information and advice has been given to persons likely to be affected by self-assessment; and what is expected to be given before the tax forms are sent out. [8315]
§ Mr. JackA substantial programme of publicity and education for those taxpayers who will be affected by self-assessment is under way. A major publicity programme aimed directly at the 9 million who get tax returns, using TV and national press, was launched in June 1995 with a second phase in the autumn. Further phases are planned until well after self-assessment has been introduced.
The Inland Revenue recognises that self-assessment will also affect agents and employers. A major initiative has been undertaken to provide them with the information they need. Information packs were sent to 85,000 agents and 1.15 million employers last summer, which have included invitations to seminars provided by local tax offices. Over 50,000 people have attended seminars so far. Further mailshots and seminars are planned for this three-year education programme.
An insert on self-assessment will accompany the tax return that people receive in April 1996—the last of the old-style forms. This will explain what the new system will mean for them and what steps they should take to prepare for it.
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§ Mr. O'BrienTo ask the Chancellor of the Exchequer what estimates of compliance costs for employers have been made concerning tax self-assessment in each of the last three years. [8316]
§ Mr. JackA single compliance cost assessment has been made to cover the overall impact of self-assessment, on employers and others, for example, the self-employed. This was published on 28 November 1994 and a copy is available in the House Library. It shows that there will be recurrent costs for employers who provide benefits to their employees—currently about a third of all employers—estimated at £20 to £30 million a year. This extra work has been kept to a minimum following extensive consultation. Those employers who are self-employed will find this to be at least partially offset by the net recurrent savings to self-employed people. The net savings to business after taking account of these and other costs are estimated at between £125 and £250 million a year.
§ Mr. O'BrienTo ask the Chancellor of the Exchequer what response he has made to representations from the Institute of Taxation in respect of the impact of tax self-assessment; and when he responded to the institute. [8318]
§ Mr. JackRepresentatives of the Chartered Institute of Taxation sit on, and play a full part in, the Self Assessment Consultative Committee. This was set up as a forum for the Inland Revenue to meet representatives of business and the professions to discuss issues relevant to self assessment. Reports are made to Ministers on major issues arising from such discussions, and Treasury Ministers have met the committee on a number of occasions.
The CIOT submitted its budget representations on 29 June 1995, and aspects of these, including self-assessment, were discussed at a meeting with the Deputy Chairman of the Inland Revenue on 7 July. Further meetings both by Ministers and the Inland Revenue have since been held at which CIOT representations on self-assessment have been discussed.
§ Mr. Andrew SmithTo ask the Chancellor of the Exchequer what is the latest estimate of the overall impact on business of the introduction of tax self-assessment, disaggregated into(a) estimated extra costs and (b) estimated savings. [8210]
§ Mr. Jack[holding answer 11 January 1996]: Self-assessment is a major modernisation of the system of tax administration which will provide a permanent reduction for taxpayers in the costs of complying with their obligations. The changes will particularly benefit self-employed people. A compliance cost assessment detailing the estimates leading to this conclusion was published on 28 November 1994. A copy is available in the House Library.
It contains the following summary figures:
Self-assessment generates a recurrent compliance net saving for businesses, mainly the self-employed, of some £125 to £250 million a year.This figure takes account of recurrent costs to employers who provide benefits to employees are estimated at £20 to £30 million a year; some but not all of these employers will benefit from compliance savings by being self-employed.675WInitial costs of adapting to the new system are estimated at £100 to £200 million.The typical small self-employed business which does not provide benefits in kind to employees could expect recurrent savings of £30 to £60 a year, more than offsetting the non-recurrent cost in a single year.The overall annual savings are net of the costs quoted by the Opposition in the press recently.