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Plumbers given chance of partial tax amnesty

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Plumbers, gas fitters, heating engineers and a range of other trades people have been offered the chance to make disclosures about any unpaid tax.

But one tax group has claimed this amounts to a broader amnesty on tax irregularities.

Under the new HM Revenue and Customs’ scheme, called the Plumbers Tax Safe Plan (PTSP), anyone who contacts the tax authorities indicating that they intend to make a declaration of any unpaid tax before 31 May will see penalties capped at between 10 per cent and 20 per cent of outstanding tax liabilities incurred during the past five years.

Anyone making use of the scheme will then have until 31 August to offer a full disclosure and to arrange for payments.

Usually, penalties vary between 35 per cent and 100 per cent of any tax charges that have been evaded.

If disclosures are not made by 31 May, HMRC has said that it will use the information available to it to engage in targeted investigations involving those trades people who have failed to offer a voluntary disclosure. The penalties then will be much higher.

The PTSP is the first partial ‘amnesty’ aimed at the trades and follows one directed at doctors and dentists last year.

Mike Wells, HMRC’s director of risk and intelligence, said: “We will be using various intelligence sources to target plumbers who have not declared their full income. I strongly urge anyone in this group who think they may owe tax on their income to get in touch with HMRC and get their tax affairs in order simply and on the best available terms.”

However, the Chartered Institute of Taxation (CIOT) said that, while the scheme may seem to be focused on the plumbing and heating industry, the offer could be open to many others.

As well as plumbers, the CIOT added, HMRC are indicating that if anyone else comes forward in order to re-order their tax affairs, they can anticipate roughly the same penalty and fine treatment as those covered by the PTSP.

The move may amount to the sort of general disclosure opportunity which the CIOT has been urging.

Gary Ashford, chair of the CIOT’s management of taxes sub-committee, commented: “Despite the focus on plumbers, HMRC have effectively announced a general disclosure facility open to anyone with tax irregularities.

“This is a positive move. A general arrangement available to all is sensible and something the CIOT has been calling for for some time.”

But Mr Ashford added that the guidance and new penalties for the PTSP are complex.

He continued: “It is unrealistic of HMRC to expect plumbers – or any non-tax expert – to read and understand this. HMRC need to communicate it in a more user-friendly way.

“The self-assessment of the penalty within the PTSP is new. This means that those taking advantage of the facility need to be very careful in deciding what behaviour led them to get previous returns wrong; if HMRC judge them to have got their self-assessment declaration wrong deliberately they could find themselves with a criminal investigation against them, or at least a higher penalty.

“My advice to anyone who thinks they may be within range of this new facility or the LDF is to take it seriously and get professional advice. We are already starting to see HMRC increase their investigation activity and seeing people involved in very expensive and time consuming tax investigations.”

However, a HMRC spokesman said that the PTSP forms have been drawn up in such a way that only plumbers and other trades people in the industry could complete them.

He did add, though, that HMRC always encourages people with unpaid tax to contact the tax authorities but that there could be no guarantee that the same preferential penalty rates would be offered in every case.