First the carrot, and now the stick

The carrot
HMRC raised over £10 million from more than 1,500 disclosures made under the Tax Health Plan, but the tax authorities are looking to raise yet more from the plan. The plan ran until 30 June 2010 and gave medical professionals the chance to come forward voluntarily and bring their tax affairs up to date. The attraction of disclosure was a fixed penalty of 10% of the underpaid tax.

The stick
HMRC is now in the process of targeting a further 2,500 doctors and dentists whom it believes should have used the Tax Health Plan, but chose not to do so. They are being sent letters telling them to rectify their tax affairs within 21 days. If this is not done, then HMRC will either make a determination of the estimated tax liability, resulting in significant additional charges or it will refer the case to its Criminal Investigations department.

HMRC has been talking to a number of parties, including pharmaceutical companies and locum agencies. As a result it now holds a considerable amount of data with which to identify those who have not notified it of all their tax liabilities. It may not be too late for voluntary disclosure, and penalties are generally less severe for people who come forward. Please contact us immediately if this affects you.