HMRC issuing Section 16 notices for tutor crackdown

by Jaimie Kaffash

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10 Oct 2011

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THE TAXMAN has been sending Section 16 notices to colleges for information about private tutors as part of its latest crackdown on tax evaders.

HM Revenue & Customs today launched its Tax Catch-up Plan (TCP), which is targeted at private tutors and coaches who have undeclared tax liabilities. Private tutors, including those in traditional academic areas but also fitness and dance instruction, music teachers and services provided by "life coaches", have until 31 March 2012 to tell HMRC about their outstanding liabilities. It is "unlikely" they will receive penalties of more than 20% of the unpaid tax, HMRC said.

Marian Wilson, head of HMRC campaigns, said the initiative will raise money for the public purse. "We are making it as easy as possible for people offering tuition and coaching to use this unique opportunity to put their tax affairs in order by making a full disclosure, and benefit from the best possible terms.
"We are using various intelligence sources to identify and then target those who do not take advantage of this opportunity to declare their full income. The message is clear: contact us before we contact you."

A freedom of information request by Abbey Tax protection services revealed that HMRC began writing to colleges to obtain information about private tutors they employ as early as 11 July this year. Since then, HMRC has said it has sent 67 Section 16 notices, which demand information on payments made to persons other than employees. It said that this number will rise to 300. Colleges that fail to comply with the demands in time will be subject to a £300 fine and a further daily fine.

Guy Smith, senior tax consultant at Abbey Tax, said feedback received from colleges suggested two main problems. "First, it's taking them a lot of time to get this information together for the three-year period and secondly, they are worried they are going to end up with employment status enquiries once HMRC sees the payment details. On the whole they are taking HMRC's assurance that ‘this is not a check of your tax affairs' with a pinch of cynical salt.

"What we don't know is what other information HMRC is gathering, in addition to the payment details obtained from the 300 colleges."

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