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The tax industry's leading professional body has drawn attention to what it perceives to be inequities in HMRC’s latest ‘amnesty’.
The Chartered Institute of Taxation (CIOT) claimed the terms of the plumbers’ tax safe plan (PTSP) are not as attractive as those of the Liechtenstein disclosure facility (LDF), and the details of the scheme are likely to confuse anyone without specialist tax knowledge.
The PTSP was launched by the Revenue on Tuesday (1 March) to give plumbers, gas-fitters, heating engineers and associated trades people the opportunity to reveal details of unpaid taxes without fear of ruinous sanctions.
Individuals who register their intention to make a disclosure will have the past fives years of their business records investigated and will face a maximum fine of 20% of tax owed – although the taxman has suggested a 10% penalty will be likely in the majority of cases.
The CIOT welcomed the PTSP as ‘a positive move’ and ‘sensible’, especially given that HMRC have said workers outside the remit of the new scheme are welcome to come forward and voluntarily share details of taxes owed. They are ‘likely to get broadly the same terms on offer’, said a department spokesperson.
However, the CIOT’s Gary Ashford said that, while the terms are good, ‘there remains unfairness in that only those with offshore assets at 1 September 2009 and a current Liechtenstein asset can use the LDF, which offers more favourable results’.
Mr Ashford, chair of the institute’s management of taxes sub-committee, also criticised the PTSP’s guidance and penalties arrangement as ‘incredibly complex’.
‘It is unrealistic of HMRC to expect plumbers – or any non-tax experts – to read and understand [the details]. The Revenue needs to communicate them in a more user-friendly way,’ he said.
‘Those taking advantage of the facility need to be very careful in deciding what behaviour led them to get previous returns wrong. If the Revenue judges 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.’
The introduction of the PTSP was described by tax investigations specialist John Cassidy as being ‘very close to [the taxman] offering a general amnesty by the back door’.
‘Despite its name, the way this one is worded seems very wide,’ he said before going on to urge the Revenue to take care with the marketing of the disclosure initiative.
‘HMRC’s record of publicising past amnesties has not been great, so I hope they will focus publicity… where plumbers go; posters at builders’ and plumbers’ merchants would be a good start,’ said Mr Cassidy, a partner with accountancy group PKF.
‘If HMRC are really prepared to offer favourable terms to UK taxpayers more widely, they ought to promote this very heavily nationwide.’
Mike Down, tax investigations partner at Baker Tilly, said the PTSP had been expected for some time. He claimed it ‘inevitably falls short of a general amnesty' but it was worth noting that 'HMRC actively invite anyone with tax irregularities to come forward and disclose using the PTSP forms’.
Mr Down went on to advise that ‘anybody with extra income or gains to disclose, whether in the plumbing industry or not, should seriously consider coming forward now.
'Those who do not and who are subsequently found out will be liable to penalties of between 35% and 100% of the tax evaded.'
