Dentists are being targeted in a new HM Revenue & Customs (HMRC) crackdown on tax dodgers.
If they make a full confession of past unpaid tax then their penalty will be just 10% of the unpaid money.
Dentists – and other health professionals – who want to take advantage of the offer have to contact the Revenue by 31 March 2010.
They must then pay the past tax, plus interest and penalties, by 30 June.
But HM Revenue & Customs (HMRC) confirmed it will be turning its attention to other professionals – solicitors, lawyers and accountants – later in the year.
A spokesman for the Revenue said the tax authorities had been gaining information about doctors, and others, from employers such as NHS trusts, private hospitals and medical insurance firms.
The Revenue’s campaign, called the Tax Health Plan (THP), follows efforts to uncover taxable income that has been hidden by UK taxpayers in offshore bank accounts.
Its most recent offshore disclosure campaign uncovered 10,000 people who said they wanted to pay tax on income hidden abroad.
If dentists do not come forward, they face penalties including a public ‘naming and shaming’ on a list of tax evaders. In the worst cases, they can face criminal proceedings and jail.
The HMRC now has the technology to cross-check returns from different companies, banks, the NHS, making it easier to spot cases of evasion.
Anyone who does not come forward, but who is subsequently investigated and found to have been avoiding tax, may be fined up to 100% of their unpaid tax, with a minimum penalty of at least 30%.
In the next week or so, many UK taxpayers will be racing to file their self-assessment returns, and pay the tax due, by the due date of 31 January.
Below tax expert Warren Hyams outlines the finer details and offers some advice for those dentists under fire:
HMRC to target dentists with Tax Health Plan
HM Revenue & Customs (HMRC) has launched an initiative entitled the Tax Health Plan (THP) specifically targeted towards dentists and doctors. The THP presents dentists and doctors with an opportunity to make good any undeclared tax. This initiative will run from 11 January 2010 to 30 June 2010 and will only be available during this interval.
To participate in the THP, individuals will need either a General Dental Council (GDC) registration number.
Under the terms of the THP individuals have to make a full disclosure of all unpaid taxes and will have to pay late payment interest together with a 10% penalty.
Why are dentists being targeted?
There have been a number of tax investigations into the tax affairs of dentists which have yielded additional tax. As a consequence, HMRC has used their extensive powers to obtain information from a number of third parties. This information will include details of payments from NHS Trusts, dental insurance companies and private hospitals.
From April 2010 onwards, using the information obtained, HMRC will carry out targeted investigations into the tax affairs of dentists who have not come forward under the THP. Prior to doing so, they are allowing dentists one final opportunity to bring their tax affairs in order and on the best available terms. This is an unprecedented step on the part of HMRC, as it is the first occasion where HMRC has targeted a specific professional group.
We would urge all dentists whose tax affairs require to be regularised to come forward and make a disclosure under the terms of the THP and benefit from the preferential terms. Failure to do so could result in HMRC launching an enquiry, which will be time consuming, intrusive and expensive in terms of professional costs. Furthermore, if tax is shown to be due, HMRC will impose a punitive penalty, which could be a maximum of 100% of the tax evaded. In certain extreme cases, HMRC could consider a criminal prosecution.
The key features of the THP are as follows:
1. It is open to medical and health professionals and specifically those regulated by the General Medical Council and General Dental Council and in possession of a GMC/GDC Registration Numbers.
2. In order to benefit from the favourable terms on offer, individuals must make a full disclosure of all undeclared liabilities.
3. HMRC will recover tax going back twenty years with 2007/2008 the latest year.
4. Registration for participation within the THP must be made by 31 March 2010.
5. Full payment of the tax, interest and penalties must be made by 30 June 2010.
6. The penalty will be fixed at 10% of the unpaid tax.
7. No penalty will be applied where the total of the unpaid taxes is less than £1,000.
8. If the unpaid tax is linked to an offshore bank account, the 10% penalty arrangement will not be available as HMRC consider that a disclosure should have been made under previous initiatives.
9. HMRC has promised that no further opportunities will be given to dentists/doctors to benefit from the attractive terms on offer.
10. Once the window closes on 31 March 2010, HMRC will commence with their investigations based on the information they have obtained. If extra tax is due, the penalties will be much higher than the 10% on offer under the THP. In this situation, the investigation could be intrusive, time consuming and professional costs will be higher.
11. HMRC will not give any guarantee that a taxpayer will not be prosecuted. As long as the subject of the disclosure is not the proceeds of serious organised crime, it is unlikely that HMRC would consider prosecution. An individual can make a disclosure under the Civil Investigation of Fraud (CIF) procedure. If CIF is offered to someone it comes with a guarantee of immunity from prosecution if the disclosure is correct and complete. The THP is not available to someone who wants to use CIF.
How can we help?
Resolving one’s tax affairs using the THP will give certainty as regards the future, in all likelihood avoid any risk of criminal prosecution and avoid a detailed HMRC investigation which can be stressful, time intensive and expensive in terms of professional costs. Our principals can support and assist persons in their dealings with HMRC, especially where additional tax liabilities might be due. We have extensive experience helping dentists in making disclosures to HMRC and ensuring that only the correct amount of tax is paid. We have represented many clients in making managed disclosures to HMRC under similar initiatives, and have the capability and skills to deal and manage any issues that arise. Our website is www.wlhtax.co.uk and contains further detail on the THP should you require it.
If you wish to discuss your personal circumstances in more detail, call 0208 959 2261 or 0208 959 1785.
Warren Hyams & Manoj Anand