The Plumbers Tax Safe Plan (PTSP)

This is a further disclosure opportunity designed to allow plumbers and heating engineers to come forward to tell HMRC about any tax irregularities. The PTSP is typical of the 'amnesties' that have been offered (a headline penalty rate of 10% and fairly short deadlines). However there are some significant differences that are of interest to a much wider range of taxpayers.

The headlines:

• Register to disclose with HMRC by 31 May 2011. 
• Requirement to make disclosure and pay tax by 31 August 2011. 
• Penalties payable of between 0% and 20% (the vast majority of cases will attract 10%). 
• The number of years to be disclosed will depend on 'behaviour'. However, HMRC’s expectation is that most cases will cover 6 years. 
• HMRC will, following the end of the opportunity, conduct investigations using industry specific information that they have obtained. 
• It is possible for taxpayers unconnected with the plumbing industry to make a disclosure under the same terms.

While there will be people in the plumbing industry concerned by the information held by HMRC who will seek to use the PTSP to regulate their affairs before they are investigated, it is the last bullet point above that will be of interest to most. Whilst there are some limitations as to who can use the PTSP, this is an unprecedented opportunity for taxpayers to limit tax liabilities to 6 years (HMRC can pursue 20 years ordinarily) and penalties of 10% rather than up to 100%.

Although the date has now passed to register a disclosure under the PTSP, it may still be possible to achieve similarly favourable terms if you have a disclosure to 'volunteer' to HMRC. HMRC has also announced a number of arrests in this sector of tradesmen who were strongly suspected of having evaded tax but who had not taken advantage of the opportunity to make a disclosure.  They reportedly have another 600 cases scheduled for detailed investigation. Accordingly, if you would like assistance in coming forward, we are pleased to offer a no obligation and completely confidential consultation with one of our experts on 0800 032 8374.

If you decide that you want to make a disclosure to HMRC you will have the assurance that you are being represented by a leading national tax advisory firm that is equipped with an industry recognised tax investigations team. We understand that clients need reassurance over costs and are happy to discuss various options, including the possibility of a fixed price service.

Taskforces

The government has provided £900m of additional funding to assist HMRC in tackling tax avoidance and evasion.  A new 'task force' initiative is expected to have immediate impact and already this has started to investigate the restaurant trade.

The teams have recently started by targeting food outlets in London and has already expanded into Scotland. HMRC will be visiting restaurant premises with the intention of identifying owners that are suppressing sales and paying staff in cash to avoid their PAYE obligations.

We would expect HMRC to carry out observations to identify the true level of trading on chosen days that can then be compared with the business records. HMRC has the power to conduct unannounced visits to business premises and inspect business records so that inspectors are able to instantly test the authenticity of the income being declared.

HMRC has been quick to point out that honest traders have nothing to fear and in a perfect world that would clearly be true. However, business owners do sometimes make mistakes with their record keeping. If they are unlucky enough to incorrectly record takings on a single 'observation day', HMRC may are unlikely to be very understanding.

We are then promised a further nine task forces set to look at other trades, with the expectation of more to follow.

There is still a choice for restaurant owners who have knowingly understated profits, albeit maybe not for much longer. HMRC has a limited number of ongoing disclosure initiatives which encourage those who are prepared to come forward to regularise their affairs with minimal intrusion and significantly reduced penalties.

Business Records Checks

HMRC has already started a pilot that will eventually result in their checking the business records of 200,000 traders over the next 4 years. HMRC officers will review the business records at the trader’s premises and where they find the records to be insufficient then will provide advice and in some cases impose penalties of up to £3,000. Where they believe that the poor record keeping may have led to an underpayment of tax they will refer the matter to colleagues to carry out an in-depth investigation.  

VAT Initiative

HMRC is to look at ways to identify and pursue businesses who have not registered for VAT despite trading above the VAT threshold (currently £73,000 per annum). Interested parties have been invited to join the initiative prior to a campaign taking place 'later in the summer'. There is little further detail or insight as to how HMRC intends to run the campaign.  However, we would expect traders turning over amounts consistently just below the registration limit to receive the most attention.