Fear is the tax that conscience pays to guilt - Howard Aiken.
Back in August 2010 we brought you an update on the results of the "Tax Health Plan" and the "New Disclosure Opportunity"; two amnesties which HMRC launched to increase tax recovery from non-compliant taxpayers. As we blogged then, while both amnesties did bring money in the door, the results were not exactly encouraging. In spite of this, however, we did speculate at the time that the amnesty approach would continue in the future not least because HMRC is under severe organisational and funding pressure.
So the new amnesty - what's it about?
Firstly it's got a catchy little handle: The Plumbers’ Tax Safe Plan (PTSP) - very nice! It's aimed at (not unsurprisingly) at people who work or have worked in:
• heating or gas installation trades;
• including anyone who installs and repairs pipes and fixtures for water, drainage or gas systems in a building.
The title could be confusing, however, as while it is aimed at the above professions, the amnesty is in fact open to all taxpayers who are non-compliant.
Why has the plumbing profession been targeted?
HMRC has been investigating the plumbing industry and collecting information online regarding businesses and people working in the industry. It's a safe assumption that HMRC have found sufficient evidence of non-compliance to warrant a targeted amnesty.
What is the benefit of utilising the Amnesty?
Carrot and stick: HMRC has extensive remit to apply penalties where a taxpayer is non-compliant and these powers are only set to increase in future. The current penalty regime is none too shabby to start with; penalties can be levied up to 100% of the tax at stake and recent developments show HMRC is becoming even more aggressive:
• HMRC now has the power to "name and shame" tax defaulters;
• HMRC is introducing increased penalties for late filing and offshore evasion.
This amnesty offers the chance to get your affairs in order but avoid the maximum penalty ratings. In fact, disclosure under the amnesty means that:
• there will be a cap on penalties at 10% (20% if your actions were deliberate);
• you can pay the tax in installments; and;
• you will only have to go back 6 years (in most cases - fraud etc however has a window of 20 years).
This is a lot more cuddly than a 100% penalty going back 20 years!
What do I do next?
If you want to make a disclosure under the PSTP, you should be aware of the following dates:
• You must register under the PSTP by 31 May 2011
• You must make your disclosure and pay (subject to those paying by installments) by 31 August 2011.
We recommend that you take professional advice if you are going to make a disclosure. Please feel free to contact us at firstname.lastname@example.org