An amnesty for higher-rate taxpayers who haven’t submitted tax returns is unfair on other taxpayers and shows that HMRC doesn’t have enough staff to collect tax, accountants have said.
Higher-rate taxpayers who haven’t submitted tax returns are being offered the opportunity to come clean and pay tax owed in return for lenient treatment.
The amnesty, announced by HMRC as part of a clampdown on tax evasion, is aimed at “people liable to pay tax at rates of 40% and who have been told to submit a self-assessment tax return for 2009/10 or earlier, but have not done so.
People have until 2 October 2012 to tell HMRC they want to take part, submit completed returns, and pay the tax and NICs that they owe. By coming forward voluntarily during the campaign customers will receive better terms, and any penalty they pay will be lower than if HMRC comes to them first, the taxman said.
After 2 October, if they have not submitted their tax returns and paid what they owe, HMRC will use its powers to pursue outstanding returns and any unpaid tax and NIC. Penalties of up to 100% of the tax due or even criminal investigation could follow.
Marian Wilson, head of HMRC campaigns, said: "The campaign provides a three-month opportunity for those who want to get their tax affairs up to date to come forward. Our aim is to make it easy for them to contact us and send in completed tax returns, putting their affairs in order.
“Penalties will be higher if we come and find people after the opportunity and some could face a criminal investigation. I urge people to come forward and disclose unpaid tax voluntarily”.
HMRC tax campaigns launched so far have yielded nearly £510m from voluntary disclosures and over £120m from non-compliance follow-up from a large number of civil interventions, including over 18,000 completed investigations, HMRC said.
There are 23 criminal cases underway. One man, a plumber, was recently sentenced to jail.
However, tax experts criticised HMRC’s latest amnesty. They said it was unfair on other taxpayers and should not be necessary if HMRC was tracking tax evaders effectively.
George Bull, senior tax partner at Baker Tilly, said the amnesty begged the question as to why HMRC hadn’t already pursued higher-rate taxpayer who owed it money. “It’s not as if HMRC doesn’t know who they are.”
“We also have doubts as to whether this amnesty is actually fair,” Bull said. “The page on the HMRC website detailing the amnesty suggests that people who sign up for the 2009/10 (and earlier) amnesty may be treated more leniently than those who have already filed late for any of those years and were charged interest and penalties. That’s a bit like retailers offering better terms to new customers than long-standing, loyal customers.”
Bull called for a general tax amnesty “giving anybody whose tax affairs are not in good order a once-and-for-all chance to make honest women and men of themselves, before returning to the normal, statutory regime for tax compliance?”
Richard Murphy, director of Tax Research UK, said in a blog that the amnesty for higher-rate taxpayers showed that HMRC was “too understaffed to collect tax.”