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HMRC today launched their latest 'amnesty’, this time aimed at medical consultants – a move that is being mooted as the future of tax investigations.
The department’s tax health plan (THP) offers a reduced penalty of 10% for doctors, dentists, hospital consultants and cosmetic surgeons who share details of unpaid tax liabilities.
The new initiative – the first in a new campaign aimed at professional people – removes the prospect of prosecution and public 'naming and shaming' for individuals who register by 31 March. They will then have until 30 June to make their disclosure and arrangements to pay all tax interest and penalties due.
Substantial fines or criminal prosecution could follow for those who do not come forward, warned the Revenue.
‘From April, we will be using the information at our disposal to investigate medical professionals who have not declared their full income,’ said Mike Wells, HMRC's director of risk and intelligence.
‘This is the first step in enabling those with undisclosed income or gains to avoid a full tax investigation together with much higher penalties. The message is clear: contact us before we contact you.’
It is understood by law firm McGrigors that the taxman held discussions with the General Medical Council and other bodies to warn them of the so-called amnesty.
The company’s director of tax investigations, Phil Berwick, said: ‘HMRC often target their compliance work at specific sectors, but to do so in the form of [an initiative] aimed solely at the medical profession is without precedent.
‘The parlous state of the public finances and the pressing need to reduce the deficit has probably forced HMRC’s hand to an extent.’
The THP is likely to be followed by further amnesties aimed at other professions during 2010 and beyond, according to commentators in the tax sector.
McGrigors partner Jason Collins said: ‘Professionals are among the taxpayers with the “broadest shoulders” referred to by the Chancellor in his policies on higher taxation, so HMRC will see them as a priority target.’
‘No doubt [the Revenue] is sharpening up the powers it has to issue “class notices” against third parties to obtain lateral information that points to undeclared tax... HMRC may be targeting the people who pay the consultants, such as health insurers.’
Strategies like the THP are the 'future' of tax investigations, claimed Stephen Camm, tax partner at PricewaterhouseCoopers.
‘These types of campaign are much more cost effective for HMRC than traditional tax investigations. They draw a line in the sand: if someone doesn't come forward under an opportunity like this they can expect little leniency when it comes to future penalties.
‘The success of such campaigns relies to a great degree on publicity, and HMRC must be prepared to spend more to promote these opportunities,’ added Mr Camm.
Mike Down of Baker Tilly – which last week predicted the THP – agreed that such measures will be used by the taxman ‘more and more and more’.
‘There’s very little use of resources involved because it’s the taxpayers who have to do most of the work,’ he said.
‘One question, however, is about how the “amnesty” will be advertised. Will it be in medical journals and such like, or will the Revenue rely on word of mouth?’
For more information on the new tax health plan, see the dedicated section of HMRC's website.
