United Kingdom
Doctors and dentists urged to sort out their tax affairs - Dawn Register
Following recent amnesties for offshore bank account holders, HMRC has announced a new disclosure facility for medical professionals with undeclared tax liabilities.
This is part of a new 'professionals campaign' so I expect HMRC to launch further facilities aimed at a particular group of professionals. Barristers and accountants are rumoured to be ask on HMRC's hit list !
The facility is called the Tax Health Plan (THP) and is open to medical professionals with undeclared income tax, corporation tax, PAYE, national insurance, capital gains tax, inheritance tax or VAT liabilities. The THP can be used by entities such as companies and trusts, where for example, a doctor as used a personal service company and not declared all the income. HMRC caused confusion when this was launched by stating it was open to "all medical professions" when in fact the registration documents require a GMC registration number. HMRC confirmed that it is only open to those regulated by the General Medical Council. The THP has since been extended to dentists.
As with some of the other disclosure opportunities, I would not call this a tax 'amnesty' because you still have to pay the full amount of back taxes, going back 20 years if applicable. It is instead a streamlined process for making a voluntary disclosure with a fixed 10% penalty. The THP does not offer immunity from prosecution which is disappointing considering HMRC are asking professionals to come forward. In some cases it may therefore not be appropriate to use the THP but to ask for a disclosure to be made under Code of Practice 9.
HMRC has been collecting information on payments made to medical professionals from various sources, including NHS trusts, private hospitals and medical insurers. HMRC are clear that those medical professionals who have a tax problem and do not use the THP will be investigated in the future using this third party information. The areas that may involve unpaid taxes include commissions, expenses claimed, the use of locums, staff accommodation and the status of workers.
The deadline for notifying HMRC of an intention to participate in the THP is 31 March 2010 and a full disclosure, together with payment of the outstanding tax, interest and a penalty, must be made by 30 June 2010. The penalty will be limited to 10 per cent of the tax liability, except where an offshore account is involved and no disclosure was made under an offshore disclosure facility. No penalty will be charged where the tax liability is less than £1,000.
Agents can make a disclosure of behalf of their client and HMRC have produced a full disclosure pack of forms and guidance. I am pleased to see that the disclosure pack includes an offer letter so that disclosures will be concluded by contract settlement. This will provide the medical professional with closure as HMRC need to formally accept or reject the taxpayers offer.
This is a good opportunity for medical professionals to come forward and regularise their tax affairs, if not the consequences under an investigation opened by HMRC are likely to be much more severe. However careful consideration should be given before using the THP as there are other methods of making a voluntary disclosure. It is also a good opportunity for us to assist smaller accountants through our Tax Investigations practice.
For more information, please contact Dawn Register at dawn.register@bdo.co.uk or 020 7893 2653 or Fiona Fernie at fiona.fernie@bdo.co.uk or 020 7893 2685.