Switch tax year to normal calendar dates, urge solicitors

The government should change the tax year to the normal calendar year, pay interest on late repayments of VAT, order a review of potentially discriminatory tax law, and decriminalise a number of customs offences, solicitors have urged.

The recommendations appeared in the Law Society's tax law committee's reform memorandum for 2002/2003, and a separate memorandum sent by the committee urging a change in tax year dates.

The detailed memorandum also includes provisions to reduce the number of income tax rates, change the tax treatment of married couples on divorce and separation, and relax the rules under which interest payments are treated as dividends.

The report said the universal application of a criminal enforcement regime in commercial customs matters is 'acknowledged to be unsatisfactory', adding: 'It is disproportionate and produces an unnecessary and harmful deterioration in relations with traders in cases where there is no question of deliberate evasion of duty or of fraud.'

The committee recommended that the government launch a full consultation on the issue of a change in the tax year to the calendar year.

It said the change - which has already been introduced in Ireland - would simplify the completion of self-assessment forms and increase compliance with the tax system.

Edward Troup, a partner with City firm Simmons & Simmons and chairman of the Law Society's tax law committee, said: 'We have amongst our members some leading tax specialists with first-hand knowledge of where the legislation is working and where the government can make real improvements which will lead to a simpler, fairer tax system for all.'

However, not all lawyers agree with the tax date change proposal.

Matthew Hansell, a tax lawyer who heads the private client department of Birmingham firm Martineau Johnson, said: 'I would be against bringing the tax date to the calendar date, because it's such a crowded time of year at the year-end that I'd leave it as it is.'

Jeremy Fleming