Income tax: why postponement and peaks at the tax office?
Bookie Tim explains
Why? As two-year-olds, we also regularly run into the most urgent question ever internally when our accountants explain the ups and downs of the Tax Authorities, returns and tax issues to us. Fortunately, every complex answer can be given a 'easy' explanation. Bookie Tim makes an effort. This time about when your tax return is filed.Once upon a time there were two freelancers
Two entrepreneurs - let's call them José and Emma - ran into each other on a drizzly Saturday in the Market Square at Vredenburgplein. After a rapt high-five, the usual chit chat about plants, the climate and the results of the handball league, they struck up a conversation about a subject close to all of our hearts: tax returns.José: "I instructed my accountant to do my income tax return four months ago, but I still haven't heard anything."
Emma: "How crazy ... the last time I delivered it, my return was prepared and submitted within two weeks."
José: "Oh... which accountant are you with then? I want that as well."
Emma: "I'm with The Bookie."
Two weeks later, José's tax return was filed, but since he didn't want to wait that long again, he called his accountant, thanked him for services rendered and indicated that he was going to switch to The Bookie.
2019
A year later, José and Emma ran into each other again, at a cultural center where they were drinking a pilsner and having almost the same conversation they had that drizzly Saturday at Vredenburgplein.José: "I don't know what I'm doing wrong, but I've been waiting almost three months for my tax return again."
Emma: "That's kind of strange. With me, again, it only took two weeks for everything to be completed. And we really are with the same accountant now..."
Does this sound recognizable? Perhaps to some. How is it possible that two entrepreneurs with the same accountant do not have to wait the same amount of time for their returns? Is it due to the type of entrepreneur?
No. José is a developer, sends 12 invoices a year and rarely buys anything. Emma is a marketing specialist, also sends 12 invoices a year and only has some travel and phone expenses. Two similar entrepreneurs with similar profits yet they're not getting their tax returns at the same time. So what's not adding up here?
What José and Emma failed to mention is when they instructed their accountant to file their income tax returns. José is always right on time, has gathered all his information together and completes his questionnaire in mid-March. By mid-June, his return is actually filed.
Emma waits longer for this. She collects all her data at the end of October, sends it to us and receives her tax return mid-November.
How is this possible?
There are more people like José in this world than like Emma. A lot of people want their affairs taken care of quickly, and they certainly don't want to worry about their tax returns. That is why they submit their data in the first few months of the year. The result is a kind of "funnel effect". About 2/3rds of all requests to file returns are made before July 1. And since we want to treat every return with the same care and accuracy, that means that in the first few months more returns come in per day than we can send out.
José neatly sends his data to us in mid-March, but many have gone before him in the four weeks before. So José is at the back of the queue. An extra misfortune for him is that in the month of April there will be a few hundred more declarations for us of a completely different kind: the VAT declaration of the first quarter. So effectively we can only start working for José at the end of May, he gets his draft declaration in June and within a week he gives his approval and so the whole process took about three months.
Then Emma: She is 'lucky' to finally - and after several reminders - submit her data to us during a relatively quiet period. After months of hard work by the Bookies, the pile of returns has shrunk considerably and there are few waiting for her. Emma's declaration is processed just about immediately, as with José there are few uncertainties and so the whole process may be completed within two weeks.
Pizzapeak
This example is illustrative of the workload distribution at accounting and administrative firms. It is not equal and never has been. Besides 4 "VAT months" (January, April, July and October), there are still 8 "income tax months" left, with the pressure being felt particularly in the first half of these 8 months. Overtime in this period is also more the rule than the exception, unconfirmed rumors even speak of a 'pizza peak' in these months (as more is eaten at work than at home). Do we mind? Absolutely not, after all we choose that for ourselves. Even in busy periods we are always there for you as accountants, it's just that sometimes you may have to wait just a little longer for your answer than if you were to ask us the same question in November ?2020
José and Emma decided to put it to the test in March 2020. They simultaneously completed their questionnaire in the Bookie Webapp. They both received their draft declaration in the mail on June 4, 2020.