Plumbers, gas fitters, heating engineers and ‘members of associated trades’ who sign up to a new disclosure facility and pay outstanding tax liabilities are to be offered a reduced penalty. But experts say that the new disclosure facility announced this morning appears to be open to anyone who has not fully disclosed their income.
HMRC said the new Plumbers Tax Safe Plan (PTSP) represents a ‘clampdown on tradespeople failing to declare their earnings and pay tax’. But the terms are ‘in line with those HMRC offers for any full and accurate unprompted voluntary disclosure of tax liabilities’.
HMRC guidance published today says: ‘Customers who voluntarily come forward and put right their tax position can expect very similar terms to those on offer through PTSP.’
John Cassidy, tax investigation and dispute resolution partner at PKF, said that while the plan may not be billed as a general tax amnesty for all UK residents, based on today’s announcement it ‘seems to be very close to offering a general amnesty by the back door’.
An HMRC spokesman told Tax Journal that a taxpayer who is outside the scope of the new facility will not be guaranteed exactly the same terms but can expect ‘broadly the same terms’ as one who qualifies. ‘It will always be cheaper for people to make a voluntary disclosure,’ he said.
The Chartered Institute of Taxation said: ‘HMRC are saying that if anyone else voluntarily comes forward to put their tax affairs in order they can expect broadly the same terms to those on offer through the Plumbers Plan. This appears to amount to a General Disclosure Opportunity of the kind the Institute has been calling for.’
The guidance and new penalties are ‘incredibly complex’, said Gary Ashford, Chairman of the CIOT’s Management of Taxes Sub-Committee. ‘It is unrealistic of HMRC to expect plumbers – or any non-tax expert – to read and understand this.'
He added: ‘The self-assessment of the penalty within the PTSP is new. This means that those taking advantage of the facility need to be very careful in deciding what behaviour led them to get previous returns wrong; if HMRC judge them to have got their self-assessment declaration wrong deliberately they could find themselves with a criminal investigation against them, or at least a higher penalty.’
Taxpayers participating in the plan will need to tell HMRC by 31 May of their intention to disclose what they owe. They will have until August 31 to ‘make their disclosure and arrange for payment to be made’. Those making a full disclosure will be charged ‘a low penalty rate – 10% for most who sign up, with a maximum rate of 20%’.
Mike Wells, HMRC's Director of Risk and Intelligence, said: ‘This is the first step in enabling those with undisclosed income or gains to avoid a full tax investigation with much higher penalties. The message is clear – contact us before we contact you.’
Details of the PTSP are set out on the HMRC website.
Plumbers, gas fitters, heating engineers and ‘members of associated trades’ who sign up to a new disclosure facility and pay outstanding tax liabilities are to be offered a reduced penalty. But experts say that the new disclosure facility announced this morning appears to be open to anyone who has not fully disclosed their income.
HMRC said the new Plumbers Tax Safe Plan (PTSP) represents a ‘clampdown on tradespeople failing to declare their earnings and pay tax’. But the terms are ‘in line with those HMRC offers for any full and accurate unprompted voluntary disclosure of tax liabilities’.
HMRC guidance published today says: ‘Customers who voluntarily come forward and put right their tax position can expect very similar terms to those on offer through PTSP.’
John Cassidy, tax investigation and dispute resolution partner at PKF, said that while the plan may not be billed as a general tax amnesty for all UK residents, based on today’s announcement it ‘seems to be very close to offering a general amnesty by the back door’.
An HMRC spokesman told Tax Journal that a taxpayer who is outside the scope of the new facility will not be guaranteed exactly the same terms but can expect ‘broadly the same terms’ as one who qualifies. ‘It will always be cheaper for people to make a voluntary disclosure,’ he said.
The Chartered Institute of Taxation said: ‘HMRC are saying that if anyone else voluntarily comes forward to put their tax affairs in order they can expect broadly the same terms to those on offer through the Plumbers Plan. This appears to amount to a General Disclosure Opportunity of the kind the Institute has been calling for.’
The guidance and new penalties are ‘incredibly complex’, said Gary Ashford, Chairman of the CIOT’s Management of Taxes Sub-Committee. ‘It is unrealistic of HMRC to expect plumbers – or any non-tax expert – to read and understand this.'
He added: ‘The self-assessment of the penalty within the PTSP is new. This means that those taking advantage of the facility need to be very careful in deciding what behaviour led them to get previous returns wrong; if HMRC judge them to have got their self-assessment declaration wrong deliberately they could find themselves with a criminal investigation against them, or at least a higher penalty.’
Taxpayers participating in the plan will need to tell HMRC by 31 May of their intention to disclose what they owe. They will have until August 31 to ‘make their disclosure and arrange for payment to be made’. Those making a full disclosure will be charged ‘a low penalty rate – 10% for most who sign up, with a maximum rate of 20%’.
Mike Wells, HMRC's Director of Risk and Intelligence, said: ‘This is the first step in enabling those with undisclosed income or gains to avoid a full tax investigation with much higher penalties. The message is clear – contact us before we contact you.’
Details of the PTSP are set out on the HMRC website.
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