Taxman throws kitchen sink at tax evaders

THE PLUMBERS’ TAX plan announced today is no doubt a positive move. There are issues surrounding it: will the lawyer who comes forward be subject to the same terms? Is three months to disclose really long enough? Does the taxman have a stick against plumbers to supplement its carrot? These are all big issues, which this website will address over the coming week.

But reading the terms on offer, another thing struck me. Seemingly innocuous, a statement on page 14 states that a disclosure will not be accepted “if you were eligible for any previous HMRC disclosure opportunity and you did not disclose then, HMRC may find it hard to accept that anything you disclose through the plumbers’ tax safe plan was not a result of something you did deliberately”.

This is sensible logic. Having chosen to ignore previous amnesties, it would be hard to convince the taxman that your intentions were pure even if your actions were careless.
However, how does this logic square with the long-term Liechtenstein Disclosure Facility?

The LDF is open from 1 September 2009 until 31 March 2015. Why should the taxman accept that people coming forward in, say, July 2014 made careless error? They have had five years to declare it, so by HMRC’s logic, surely this would mean that they are deliberately defaulting?

In Liechtenstein, HMRC understandably prioritised pragmatism to get a better deal with its government. And we can expect to see pragmatism dictate all areas of amnesty policy – from accepting applications from non-plumbers, to not enforcing the deadlines too strongly, to giving people who come forward the benefit of the doubt when they claim careless error over deliberate defaulting.

The other side of this pragmatism is that those who do not come forward will find it even harder to claim a better deal…

(This is the first Tax Hack blog by Jaimie Kaffash who takes over from David Jetuah as of today)

Related reading