Tax disclosure opportunity - not just for Plumbers

HM Revenue & Customs (HMRC) have announced the introduction of the ‘Plumbers Tax Safe Plan’, which has been targeted at the plumbing and heating industry because HMRC have secured information from regulating bodies, etc. about these sectors, and have started identifying those who may have tax irregularities.  As a result individuals within that industry may be targeted for tax investigations when the period given for declarations comes to an end.

HMRC have, however, also said that anyone else who voluntarily comes forward to put their tax affairs in order within the timescales of this scheme can expect broadly the same terms to those on offer through the Plumbers Plan – which effectively amounts to a General Disclosure Opportunity for anybody who has undeclared or understated income, gains or any other tax liabilities.  The exception to this general availability is anyone who should have used another Government disclosure opportunity in the past (broadly those with undeclared overseas income and doctors or dentists).

Anyone who does come clean under the scheme will be offered a much reduced penalty of a maximum of 20% - whereas those who do not disclose voluntarily could face penalties of up to 100% of the tax owing.  Anybody who is found to have previously understated liabilities and who ignores the opportunity to disclose also risks having a formal enquiry opened into their tax affairs involving a detailed investigation, which could go back for 20 years, rather than the 6 years maximum which HMRC expect that most who participate in this scheme will have to pay.

HMRC must be notified of the intention to make a disclosure within the period from 1 March to 31 May 2011, and disclosure calculations and payment of liabilities must be received by HMRC by 31 August 2011.  HMRC may allow those who can’t afford to pay what they owe to spread their payments, depending upon their circumstances, although it will be necessary to come to an agreement with HMRC about payment terms once the amount owing has been ascertained, but before submitting the disclosure.

The disclosure will be required to include all undeclared liabilities – not just those connected with the plumbing industry – and it will also be necessary to tell HMRC whether extra VAT and/or National Insurance Contributions will be due, or if Tax Credits have been over-claimed. 

Those taking advantage of the facility will need to decide what behaviour led to the under-declarations and “self-assess” their penalty; but if HMRC judge that the disclosure declaration or penalty amount has been deliberately understated they would at the very least issue a higher penalty - but could potentially also start a criminal investigation.

HMRC make it clear that this is basically an opportunity to make a “fresh start”, so that you can stop worrying about what might have happened had HMRC found out that you had undeclared liabilities, and start getting things right going forward.

Anyone wishing to make such a disclosure should seek expert advice on how to do it in a way that keeps penalties to a minimum, whilst reducing exposure to further investigation and potential prosecution.  Ensors have experience in the process of making these disclosures and can support and assist individuals with notifying and making the calculations and disclosure, and also in their dealings with HMRC, ensuring that only the correct amount of tax is paid.

If you have any questions please do not hesitate to contact your usual Ensors contact, or alternatively Anne Wright (email anne.wright@ensors.co.uk)  or Henry Wood (email henry.wood@ensors.co.uk). 

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