Can you disclose your tax irregularities, if you are not a plumber?
H.M. Revenue & Customs (HMRC) recently launched a new initiative to encourage those who have not been paying the correct amount of tax, or who have started working for themselves but have not told the tax authorities of all the income that they have earned. This initiative is called the Plumbers Tax Safe Plan (PTSP).
The good news is that this offer extends not just to plumbers but anyone, no matter what their trade or profession, who voluntarily comes forward to put right their tax position. If an individual does this HMRC have said the individual can expect terms very similar to those on offer through PTSP.
Ordinarily, individuals who have not paid the correct amount of tax could face a maximum penalty of 100% of the previously underpaid tax in addition to the tax due. Those that make a declaration under PTSP can expect to receive a substantially reduced penalty at a maximum of 20%, and in most cases as little as 10%, of the underpaid tax. This highlights the potential benefits for individuals coming forward now.
HMRC have also promised that under PTSP they will only look back through an individual’s affairs for a maximum of six years, no matter how many years the individual is behind with their tax. If the individual can show that they have taken reasonable care to make sure their tax affairs are correct, but they have still paid too little tax, they will only have to pay HMRC what they owe for a maximum of four years. For matters outside of PTSP the law allows HMRC to look back 20 years and in serious cases HMRC may carry out a criminal investigation.
This offer by HMRC is one that we are recommending to anyone who has allowed his or her tax affairs to become disorganised. Indeed we consider it to be significant that the offer has been hidden in the middle of a document about the plumbing industry and HMRC have spent little on advertising the scheme to the general public, almost as if they were afraid that it would be too popular because its terms are too attractive.
We endeavour to ensure that our clients are as tax compliant as possible, but we are aware that you may have family, friends, clients or acquaintances that may have under declared their income or simply not realised that they need to file a tax return for a business they may have started. The terms and conditions of PTSP are complex. HMRC expect the individual to work out the tax and national insurance due, together with interest and penalties. It is therefore important for the individual to seek professional help to ensure that the PTSP scheme is for them and to navigate the process.
Time limits under PTSP are short. The deadline for an individual to notify HMRC that he or she intends to make a declaration is 31 May 2011 and the declaration itself must be made by 31 August 2011. If you think the PTSP scheme could be for you or any of your family, friends, clients or acquaintances please contact us.
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.