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Low response to HMRC’s tax health plan

23 July 2010
Issue: 4265 / Categories: News , CIOT , disclosure , Phil Berwick , tax health plan , Income Tax
Only 1,500 disclosures received

So far HMRC say they have had around 1,500 disclosures totalling approximately £9 million as a response to their tax health plan. The highest amount disclosed from a doctor is in excess of £1million, and from a dentist more than £300,000.

A press spokesman for HMRC said: ‘Most interesting has been the sources of income revealed by disclosures - we now know of several specific new sources of information linked to undeclared incomes for doctors and for dentists.

'We have established that our information powers allow us to access the information from previously unknown sources and we are obtaining this now. Although follow-up investigations have already begun, we want to ensure that we have this new information available as well before we close any investigation.’

The deadline for disclosure was 30 June, but HMRC said they will still accept voluntary disclosures. The penalty imposed in such cases will be higher than the 10% guaranteed in the tax health plan, but will still be less than 40% or more when HMRC carry out an investigation. Medical professionals have until 1 September to come forward with undisclosed income, said the spokesman.

The Chartered Institute of Taxation is concerned at these statistics. According to Gary Ashford, chairman of the institute’s management of taxes committee, HMRC believed there were around 30,000 medical professionals who might have undisclosed tax liabilities.

‘If only 1,500 have come forward, that is a considerable surprise and suggests that either many professionals are not taking this seriously – or that HMRC have failed to get their message across properly,' he said.

Noting that the department clearly intended ‘to come down hard on defaulters’, Mr Ashford added ‘we have been told that HMRC will start using the full powers available to them for non-compliance in this area from 1 August. Any medical professional with undisclosed tax liabilities really should take advantage of this brief window to take advice and start getting their affairs in order’. 

McGrigors’ Phil Berwick said the response and the £9 million so far disclosed were ‘poor, even pathetic’. He wondered if taxpayers were becoming ‘amnesty-weary’. There is no obvious deterrent as there have, so far, been no prosecutions from the offshore disclosure facility of 2007, despite promises from HMRC that there would be.

Overall, he said HMRC should probably rethink any subsequent disclosure opportunities to ensure they are 'more effective in persuading the people to come forward'.

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