UK Amnesty Targets Medical Professionals

by Robert Lee, Tax-News.com, London

13 January 2010

In what is being reported as an unprecedented attack on middle class taxpayers, HM Revenue and Customs (HMRC) has announced a new amnesty scheme to give medial professionals an opportunity to report understated income before a new crackdown is launched.

The so-called "Tax Health Plan," announced by HMRC on January 10, will run until March 31, 2010, during which time doctors, dentists and other health professionals can make a voluntary disclosure about any unreported income and face reduced penalties.

The Tax Health Plan will operate in two stages: from January 11 to March 31, 2010, medical professionals can register their intention to make a voluntary disclosure with HMRC. By June 30, those who have registered must have made their disclosure as well as arrangements to pay all tax, interest and penalties due.

If HMRC receives a full and accurate disclosure of any income on which tax has not been paid, along with payment, by 30 June, those who qualify can expect a reduced penalty of 10%.

After the registration deadline, HMRC will provide information it holds about how much is paid to them and carry out "targeted investigations" aimed at medical professionals who have not come forward. Penalties of up to 100% of unpaid tax or criminal prosecution could await those who refuse to bring their tax affairs in order, HMRC warns. Individuals found guilty of tax evasion could also find themselves "named and shamed" on HMRC's website.

Launching the campaign, Mike Wells, HMRC's Director of Risk and Intelligence, stated: "Our aim is to make it as easy as possible for people to come forward, make a full disclosure and benefit from the certainty of a reduced 10% penalty that HMRC is making available to those who qualify for this opportunity."

Wells added: "From April we will be using the information at our disposal to investigate medical professionals who have not declared their full income. I therefore strongly urge any in this group who think they may have outstanding tax liabilities on their income to get in touch with HMRC and get their tax affairs in order simply and on the best available terms."

While HMRC has run two amnesties aimed at offshore bank account holders, this is the first time the government has targeted a certain industry or sector of taxpayers, and tax experts believe that the Tax Health Plan represents the first step in a new compliance strategy.

“This initiative builds on the previous offshore disclosure facilities and is the first time we have seen this approach adapted to a particular industry sector. I am sure that it will not be the last," noted Andrew Jupp of RSM Tenon, the accountants and business advisors.

"These types of campaign are much more cost effective for HMRC than traditional tax investigations – they are the future," commented Stephen Camm, a tax partner at PricewaterhouseCoopers.

"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, which will be extremely high – up to 100% of the tax," he added.

However, John Cassidy, Tax Investigations Partner at PKF, is wary of the move, suggesting that the government’s increasing but selective use of tax amnesties is putting aside fairness in the pursuit of a quick boost to tax revenues.

“After the original Offshore Disclosure Facility in 2007, there followed the New Disclosure Opportunity and the Liechtenstein Disclosure Facility last year. Now in 2010 there is the [Tax Health Plan] - one assumes that another amnesty will come along in April for a new group," Cassidy observed.

"Whilst I welcome any facility that helps people come forward, HMRC should realize that the more amnesties there are, the more confusion there is for the public and less attention people will pay to them. Worse still, tax evaders who cannot benefit from the current amnesty could be forgiven for thinking that they should just sit tight because there will be another one along in a minute! That is not the right thing to do in my opinion but such an attitude would not be surprising in the circumstances,” he concluded.

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