50,000 plumbers, gas fitters and heating engineers will soon get a letter from the taxman; alerting them to a special time-limited tax amnesty to put right any problems in their tax affairs. Once the opportunity expires, HMRC will begin a clampdown on those working in the sector who have failed to declare earnings and pay the tax they owe.
Under the tax plan, plumbers, and members of associated trades (such as builders) who owe tax which they have not yet declared can come forward before 31 May 2011 to tell HM Revenue & Customs they want to take part. The taxman says that “if they make a full disclosure, most face a low penalty rate of 10 per cent, with a maximum of 20 per cent”. That compares to the normal maximum penalty of 100% of the evaded tax. HMRC also say that plumbers and similar traders will get a simple and straightforward way to put their tax affairs right. Once they come forward, they have until 31 August to make their Full Disclosure and arrange for payment of the tax, interest and penalties. After that date, using information pulled together from different sources, tax inspectors will investigate those who have failed to come forward. “Substantial penalties, rising to 100%, or even criminal prosecution could follow”, warns the taxman.
This Tax Amnesty is known as The Plumbers’ Tax Safe Plan (PTSP). It is the first such campaign focused on trades-people. HMRC say it is designed to make it easy for those in the plumbing industry to put their tax affairs in order.
If people do not voluntary step forward the taxman says they may get caught: “… using a variety of intelligence sources to target plumbers…”. HMRC has used legal notices and new technology to gather and analyse data from industry bodies, tax records, advertising directories and Health & Safety Prosecutions. This detailed information will be used to contact and then pursue people who do not come forward and use the PTSP.
Not many plumbers are likely to be reassured when the brown envelope hits the doormat by the taxman also saying: “We do not think everyone who receives a letter owes us tax. However, if you owe tax and don’t get a letter, do not assume that HMRC will not
catch up with you.”
To join the tax plan people with connections to the plumbing trade must:
- Register with HMRC to “notify” that they plan to make a voluntary tax disclosure by 31 May;
- They then have until the 31 August to tell HMRC about tax due and make arrangements to pay any tax interest and penalties due. This is called “making a disclosure”.
The Plumbers’ Tax Safe Plan process can be straightforward in simple cases. But there are many pitfalls for the inexperienced and for people with more complex tax affairs. In particular HMRC are hiding in the small print the distinction between those people who have made simply innocent or careless mistakes and those whose accounts are deliberately wrong. If you have under-declared your true earnings for a number of years then the six year time limit of the Plumbers’ Tax Safe Plan may not be applied to you. HMRC may then seek to go back 20 years and seek higher penalties. Badly managed Disclosures can have a negative effect; leading to very high penalties, a Civil Investigation of Fraud enquiry, or even prosecution. It is essential that any plumbers, builders etc with understated income take expert advice before approaching HMRC. Lynam Tax Enquiry Specialists have substantial experience of all the various Tax Amnesties and are experts in this field.
How can Lynam Tax Enquiry Specialists help me?
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business. Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997.