THE TAXMAN HAS made great play of the opportunity presented to plumbers as part of its new Plumbers’ Tax Safe Plan (PTSP). But the scheme’s success goes far wider than how many plumbers come forward.
On the one hand, it is pretty much a marketing strategy, letting people know that they will be treated towards the lenient end of HMRC’s statutory penalty regime if they come forward in an attempt to get people back into the tax system.
On the other, it is the start of a series of campaigns that will target professions most prone to evasion through obtaining the relevant data, with the aim of catching deliberate defaulters. And, whereas previous, fragmented amnesties have failed, this strategy could just work – without draining resources.
Unlike in other agreements, such as the tax health plan and the offshore disclosure facilities, it did not simply come upon information about its subjects. HMRC inspectors on the ground found evidence that there were greater opportunities to evade tax within the plumbing profession due to its propensity for cash-in-hand work.
As a result of this, HMRC obtained data from the industry watchdog Gas Safe – and former regulator Corgi – on plumbers and associated trades that will allow it to
identify evaders within the profession. It has used this with its new “Connect”
system which cross-references a variety of information sources to work out what an individual plumber should have been paid.
This proactive approach may not yield more people coming forward than, say, the tax health plan. But the taxman has indicated that this is the first of a series of campaigns, and there are likely to be more on other trades in the near future.
Plumbers may be the easiest target, as they have to submit paperwork to Gas Safe, but the move to tailor approaches to one profession at a time could prove useful. It might not catch the most determined evaders, but it should catch enough to raise their concern. And by using similar information systems and data that can be acquired on request (as opposed to the stolen files from Liechtenstein accounts, for example), long-term costs are kept down.
To sweeten the increased focus on the one profession, plumbers have been offered better terms than usual to come forward – a 10% penalty on tax owed through careless error, going back six years. There has been much focus on whether this is a general amnesty. The details of the plan state that non-plumbers who come forward can “expect very similar terms”.
“Any adviser that is not pushing for identical terms is not doing his job properly,” said John Cassidy, tax partner at PKF.
But these are not better than the usual terms – instead, they fall within the lenient end of a range dictated by statute. And the only reason that HMRC has not badged this as a general amnesty is because it cannot handle the logistics of a “full amnesty” in a six-month period, according to Gary Ashford, national head of tax risk, disputes and investigations at RSM Tenon.
Of course, if the taxman does decide to discriminate against non-plumbers by imposing penalties towards the harsher end of the scale, the individuals who come forward could be on shaky legal ground because, as Barlow Lyde & Gilbert partner James Roberts says, “that non-plumber has in effect broken the law” in the first place.
But HMRC has conceded that it would be difficult to discriminate against non-plumbers and there is unlikely to be the will to do so. The ideal scenario for the taxman is receiving the revenue it is owed and, as importantly, getting people back into the tax system. Other than exceptional circumstances, quibbling over penalties will do no party much good.
It is likely that other apparent agreements will follow, and the same logic will apply, with the lenient end of the scale being the norm offered to people coming forward.
This opening gambit is a strategy that could benefit all, from the tax adviser who can emphasise the benefit of honest disclosure, to the HMRC, to the Exchequer. The only person unlikely to benefit is the deliberate evader, who may yet see a spanner in the works of his accounts.
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