Tax & Accounting News

Time to ensure tax compliance

25/05/2010

With high-earning professionals in the medical sector the latest group to be targeted under HM Revenue and Customs’ crackdown on tax evasion, there is speculation that other ‘middle class’ professionals such as solicitors or accountants could be next in line.

Under the Tax Health Plan (THP), HMRC has used new powers to obtain information about the tax affairs of the individuals concerned, including GPs, hospital consultants and dentists, and is approaching NHS trusts, private hospitals and private medical insurers to gain more information on payments made.

Those working in the sector had until 31 March to make a voluntary disclosure about any income which has not been declared. The disclose itself will need to be made by 30 June 2010. As with most amnesties, anyone who does not declare additional information now is likely to face tougher penalties if tax evasion is subsequently uncovered, including penalties of up to 100% of the tax involved and even criminal prosecution, as well as the prospect of being ‘named and shamed’ on the revenue’s website.

Under the terms of the THP, taxpayers will be required to pay the tax due on their income, any gains arising on their unpaid tax liabilities, interest and, in most cases, a fixed 10% penalty.

Examples of tax evasion among the medical profession cited by HMRC include not declaring fees for private work, payments for consultation work, or payments for drafting medical reports.

HMRC’s attention is now likely to switch to other professions, making this a good time for individuals to ensure their affairs are compliant. With HMRC likely to use its powers to obtain information from third parties, as it has with doctors, it is important that all work, including work in progress, is accounted for. Undeclared income from other sources may include income from directorships or from acting as a Judge.

If you have any enquiries, or would like any further advice or background information on this matter, please contact Martina Fitzgerald at Harris Lipman.