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Inland Revenue targeting GPs for tax investigation

Medical accountants believe GPs are the focus of an Inland Revenue crackdown on tax compliance.

Accountants said a record number of their GP clients were the focus of tax investigations and cases had been increasing throughout the year.

A significant number of the investigations have focussed on GPs' medicolegal work, including examinations for insurance company claims.

Arthur Dixon, senior manager for private clients at the Newcastle office of accountants Deloitte & Touche, said six of its clients were under examination, and two cases involved GPs' medicolegal work. One GP had been forced to pay £27,000 in extra tax, plus insurance and penalties.

Mr Dixon said the Inland Revenue was 'getting its act together' after undertaking few investigations when self-assessment was set up.

'It's not that the GPs have not been paying tax but that they haven't recorded the income properly and tax may have been under-declared,' he said. 'It makes you wonder if there's a campaign'.

Sue Beaton, accountant with Coveney Nicholls in Reigate, Surrey, said four of its GP clients had been the subject of an Inland Revenue enquiry this year.

The firm's usual rate would be one investigation a year.

'It seems they are generally inquiring into doctors more than ever before,' she said. 'Clients panic like mad and automatically think they are going to jail.'

The GPC said it had no reason to think GPs were being targeted because the Government had always intended to increase the number of investigations into people who self-assess their tax liability.

But GPC negotiator Dr Peter Holden said the Inland Revenue could be focussing on medicolegal work because of a pending European court judgment on whether it was VAT exempt.

At present medical services and medicolegal work are both exempt, but the case could mean a change.

'If medicolegal work is deemed a specialised legal service it will become liable for VAT,' he said.

Dr Holden said if the law changed the BMA would release advice to GPs on the need to register for VAT.

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