CIOT: New tax disclosure opportunity is for everyone, not just plumbers

Tuesday, 1 March 2011 12:00 AM

The Government's new 'Plumbers Tax Safe Plan' may be targeted at the plumbing and heating industry, but the offer to come clean on undeclared tax at a reduced penalty rate seems to be open to all, says the Chartered Institute of Taxation (CIOT).

Under the plan, plumbers and members of certain associated trades who have tax to pay which they have not yet told HMRC about can come forward by 31 May to tell the department of their intention to disclose what they owe. If they make a full disclosure, most face a low penalty rate of 10 per cent, with a maximum of 20 per cent.1

Alongside this, HMRC are saying that if anyone else voluntarily comes forward to put their tax affairs in order they can expect broadly the same terms to those on offer through the Plumbers Plan. This appears to amount to a General Disclosure Opportunity of the kind the Institute has been calling for.

Gary Ashford, Chair of the CIOT's Management of Taxes Sub-Committee, commented:

"Despite the focus on Plumbers HMRC have today effectively announced a general disclosure facility open to anyone with tax irregularities.2

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

The CIOT has drawn attention to the terms of the new facility (which, although good, are not as good as the Liechtenstein Disclosure Facility - LDF) and the guidance material that HMRC has produced on the arrangements (which is extensive).

Gary Ashford also commented on the terms of the new facility:

"The terms of this offer are good but there remains an unfairness in that only those with offshore assets at 1 September 2009 and a current Liechtenstein asset can use the LDF which offers more favourable results.

"The guidance and new penalties for the PTSP are incredibly complex. 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".

Notes for editors

1. HMRC have called this the Plumbers Tax Safe Plan because they have secured information from regulating bodies, etc. about those in the plumbing and heating industry and have started identifying those in that sector that have tax irregularities. As a result those within that industry will be targeted for tax investigations when the period for declarations comes to an end.

2. The exception to this general availability is anyone who has been offered another government disclosure opportunity in the past. These include the New Disclosure Opportunity, Tax Health Plan or Liechtenstein Disclosure Facility.

3. The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT's primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it - taxpayers, advisers and the authorities.

The CIOT's comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members' experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.

The CIOT's more than 15,000 members have the practising title of 'Chartered Tax Adviser' and the designatory letters 'CTA'.

- ENDS -

George Crozier
External Relations Manager

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The Chartered Institute of Taxation
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The Association of Taxation Technicians
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