Plumbers have under 14 days left to register for the Plumber Tax safe plan, and we wonder how many will register?
For the last few years HMRC have developed these tax amnesties, a chance for you to own up to unpaid tax before HMRC start any investigations. First it was doctors and now it’s the trades turn with the first target those involved in the plumbing industry. If you’ve never heard of the Plumbers Tax scheme, then why not download our Plumbers Tax safe scheme leaflet for more information.
So is the Plumbers’ Tax Safe Plan (PTSP) a good deal?
Definitely yes. It’s a chance to sort things out before HMRC come after you. The penalty is a lot less than under a conventional investigation. In nearly all cases disclosures will be accepted with no further questions. There’s no need to meet an inspector, and the strain and cost of a typical investigation is avoided.
If you haven’t got all the records, or indeed any records, for omitted profits HMRC will accept ‘reasonable estimates’. These estimates would be based on whatever evidence was still available. But don’t make unrealistic guesses. If a disclosure under the PTSP is seriously wrong all the benefits will be withdrawn.
While the PTSP is aimed at income from plumbing and related trades all tax problems have to be disclosed. So you settle all tax issues at once with reduced penalties. Those who don’t use the PTSP and are caught later will end up paying a lot more.
HMRC can also conduct criminal investigations into tax fraud. While it does not give a guarantee it is most unlikely that anyone making a full disclosure under the PTSP will face a criminal investigation.
To use the PTSP you must register by 31 May 2011.
Disclosure and payment must be made by 31 August 2011.
Penalties in a standard tax investigation can be 100% of the tax not paid- but are usually a lot less. The PTSP penalties depend on why things are wrong.
- If a return was wrong despite reasonable care then there would be no penalty- but you can expect HMRC to be sceptical.
- If a return was wrong because of carelessness- 10% of the tax but no penalty at all for 2008/09 and 2009/10
- If you didn’t tell HMRC you were trading , but this was down to carelessness- 10% of the tax but no penalty for 2009/10
- If a return was deliberately wrong or you deliberately didn’t tell HMRC you were trading – 20% of the tax
- If you deliberately sent in wrong returns and took steps to conceal what you had done HMRC say the favourable PTSP penalties don’t apply.
If someone could have used the PTSP but doesn’t and is later investigated by HMRC then the penalties will be a lot more- in some cases 50% of the tax could be charged.
The PTSP does involve paying tax, interest and penalties but it is still a great opportunity in that the penalties are substantially reduced, stress and inconvenience minimised and professional fees will be less compared to a detailed tax investigation.
What about those who want to disclose tax irregularities but aren’t plumbers?
HMRC has stated in the guidance issued regarding the Plumbers Tax Safe Plan that any taxpayer who is not a plumber can make a disclosure using the same forms as for the PTSP and that those coming forward can expect broadly the same terms as are being offered under the Plumbers Tax Safe Plan. Therefore any client who potentially has a disclosure to make should consider taking advantage of this opportunity.
There is some useful information at the HMRC Website http://www.hmrc.gov.uk/trades-disclosure/index.htm. There is also an HMRC number you can call 0845 600 4507.
Our tax team can also help with:
- Calculating the tax due
- Reasonable estimates- what will HMRC accept?
- Number of years- what’s the minimum HMRC will require?
- The right penalty rate- can you get the low rate?
- Accurate completion of the HMRC forms
- Advice on instalments
- Risks of criminal prosecution
- Protection for our client from the accountancy fees if HMRC start an investigation.
Call us now on 0845 365 1000 or email to email@example.com for more help and advice.