The plumbers amnesty (Plumber’s Tax Safe Plan or PTSP) that HM Revenue & Customs (HMRC) launched in March, was criticised as being a ‘damp squib’ at the time after a low take-up with many plumbers unconvinced that HMRC had any information about any undisclosed earnings. HMRC has hit back with news that it has arrested five plumbers on suspicion of tax evasion.
On top of the arrests, 600 civil investigations have been launched into those who failed to register to disclose any irregularities under the favourable terms of the PTSP and HMRC has warned that further raids and arrests should be expected over the coming weeks throughout the UK.
The key point on the recent arrests is that the date for declaring the underpaid tax is not until 31 August 2011, so this first wave is aimed at those who did not register by 31 May 2011. It is also a clear sign that those who did register need to carefully consider their disclosure before 31 August 2011. It is further evidence that HMRC, appears to be adopting a ‘carrot and stick’ approach to cracking down on tax avoidance and evasion; launching an ‘amnesty’ with lower penalties, then vigorously pursuing those who fail to come forward.
In HMRC’s 2010 disclosure opportunity for medical professionals, The Tax Health Plan, there was a much more muted response with a number of investigations into doctors and other medical staff but no high profile arrests. As HMRC continues to sift through the information received from private medical groups, it is now anticipated that further investigations and prosecutions will be in the near future. Indeed, HMRC itself has confirmed that it intends to increase its prosecutions five-fold this year.
But what of those either in the plumbing trade or medical profession that failed to come forward and are now looking over their shoulders, nervous of HMRC knocking on their door? Put simply, anyone, whether in an amnesty trade or not, who has undeclared tax liabilities should consider coming forward. Those who make a voluntary disclosure will always be looked on more favourably by HMRC than those who remain in the shadows and have to be sought out by the department. With £900 million pledged to HMRC by the Government to beef up its compliance activities and pursue more tax evaders, now is a good time to take advantage of any ‘amnesties’ that are offered by HMRC. The Liechtenstein Disclosure Facility, for holders of offshore bank accounts is still open, and further trade-based initiatives are expected to come along soon.
Although the registration period for the PTSP closed in May that route to disclosure is still open but without the same initial favourable terms.
The example of the PTSP clearly shows that HMRC is launching trade-based amnesties only when it has a significant amount of information about the non-compliance of certain individuals, and it is prepared to use that information to pursue those who are unwilling to come forward and regularise their tax affairs of their own accord.
The current amnesty is the VAT amnesty with a registration deadline of 30 September 2011. Next on HMRC’s radar is rumoured to be education professionals, such as private tutors and fitness instructors. Few details are available so far on what shape any disclosure opportunity for these individuals will take, but an announcement from HMRC is expected in the near future.
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