The national tax amnesty for doctors will end this month, but who is being targeted and what might happen if you don’t declare any untaxed income? Auditor and former tax inspector Julie Cameron answers your questions.
1) Why has the taxman decided on a tax amnesty now?
HM Revenue and Customes believes that a number of medical professionals have been understating their income. The department has been collecting financial information from NHS Trusts, private hospitals and insurance companies and will be comparing it with tax returns submitted by medical professionals.
This latest offering is aptly named the ‘Tax Health Plan’. This is the third amnesty in less than a year and follows the streamlined but formulaic approach set out in the very first of its kind, the Offshore Disclosure Facility of 2007.
2) Should GPs be worried about this? Who will be most affected?
HMRC has said the amnesty is open to all medical professionals registered with the GMC plus dentists. As such it will affect any such professional who has understated income
3) If you have got something hidden, how much is a significant amount and how you should go about declaring it?
This is not an ‘amnesty’ in the true sense of the word: in return for a full disclosure of irregularities, the individual will pay the tax and interest due plus a penalty, restricted to 10% of the outstanding tax.
Any medical professional who wishes to make a disclosure under the amnesty should register before 31 March 2010. Registration can be done online.
Following registration, a number of forms need to be completed; all duties must be paid and forms submitted by 30 June 2010. Disclosures should cover all years back to 1988/89, although HMRC confirms that for 2003-04 and earlier, information does not need to be provided for a year in which the unpaid tax and duties is less than £50.
4) What might happen if I don’t declare it?
HMRC is anxious to point out that a failure to come forward will result in a stiffer penalty if an investigation is opened after the closing date of 30 June 2010, based on information received. In response to expressed concerns, HMRC has confirmed that it will not reveal the names of those who come forward to the GMC, nor will they be ‘named and shamed’ under the Budget 2009 proposals for publishing the names of certain offenders on the HMRC website.
5) Why is HMRC just targeting the medical profession?
HMRC has confirmed that other professional groups will be targeted through further ‘amnesties’, so medical professionals need not feel victimised.
The concern for medical professionals is that, in checking the disclosures made under the amnesty, HMRC will take the opportunity of widening enquiries to expenses claimed where the Department perceives there is more tax to be gained. This may apply in particular to travel expenses claimed between home and hospitals when consultancy work is performed, regardless of whether there are valid grounds for claiming the home as the base of a consultancy business.
Julie Cameron is a former Tax Inspector, and associate director with Baker Tilly’s Tax Risk and Investigation Management Team. Please contact her at firstname.lastname@example.org for more information. Baker Tilly also operate a confidential helpline dealing with all tax Investigation issues on 0800 032 8374.
What the tax amnesty means for you