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HMRC offers plumbing trade tax amnesty

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1st Mar 2011
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HMRC will allow plumbers and people in associated trades to declare their unpaid taxes for the past five years, signalling a change in HMRC policy concerning disclosure agreements.

Unlike previous amnesties – such as the Tax Health Plan (THP) and Liechtenstein Disclosure Facility (LDF) – the Plumbers Tax Safe Plan (PTSP) is not based on information unearthed about plumbers' accounts and covers just a five rather than 10-year period.

HMRC does not have specific information about plumbers' accounts and as such is using data obtained from the Gas Safe register (previously known as Corgi) to target plumbers.

HMRC has stressed that it is only a minority in the trade who do not fully declare their taxes.

Anyone thinking of entering the PTSP scheme will have until 31 May to notify HMRC of their intentions with arrangements to pay them off by the end of August.

The penalties will be:

  • 10% for careless errors
  • 20% for deliberate defaulters

Last year the permanent secretary for tax Dave Hartnett told TaxTV of the department's intention to extend the amnesty to other trades and professions beyond has fitters.

John Cassidy, tax investigation and dispute resolution partner at PKF, said: “The taxman has offered specific tax amnesties in the past but, despite its name, the way this one is worded seems very wide: it offers ‘very similar terms’ to anyone who wants  to make a full tax disclosure, whether they use the standard PTSP forms or not. The PTSP may not be billed as a general tax amnesty for all UK residents but, based on today’s announcement, this seems to be very close to offering a general amnesty by the back door.

“HMRC’s record of publicising past amnesties has not been great, so I hope it will focus its publicity for the PTSP where plumbers go: posters at builders’ and plumbers’ merchants would be a good start. And if HMRC is really prepared to offer these favourable terms to UK taxpayers more widely, it ought to promote this very heavily nationwide”, Cassidy added.

Following last year's TaxTV scoop, presenter Giles Mooney commented: “The scheme has been so successful in HMRC’s eyes dating back to offshore and doctors amnesties that I suspect the Revenue will keep going after individual trades. HMRC needs specific information before this can work – banks helped with the offshore, BMA and the Records Office helped with the doctors and it seems Gas Safe is involved here.”

“I’d have thought European law prevented them picking and choosing, but they seem to be approaching it in that way. Double glazing also has to be registered so they could be quite high up the list.”

HMRC has provided a guide which outlines the amnesty terms. Visit the HMRC website for further details on the initiative.

Important dates to note are:

  • 1 March 2011 - the start of the Plumbers Tax Safe Plan
  • 31 May 2011 - the last day you can notify
  • 31 August 2011 - your disclosure must reach HMRC by this date.
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Replies (10)

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Quack
By Constantly Confused
01st Mar 2011 12:30

So...

... when it says 10%/20%, is that the maximum?  Because it was my understanding that declaring an unprompted careless error generally attracted a 0% penalty.

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By Robert Lovell
01st Mar 2011 16:09

10%/20% is the maximum

A PKF statements reads...

"The tax penalty rate to be paid will depend on individuals’ circumstances. Where individuals have underpaid tax because of making careless mistakes with their tax returns or have forgotten to tell HMRC that they have started up in business, tax penalties will be limited to between zero and 10% of the tax due - cheaper than the 30% penalty that could otherwise be charged in such situations. Where individuals have deliberately understated their income or not told HMRC that they have started trading, tax penalties will be limited to 20% - a bit more expensive than previous amnesties, but still much cheaper than the penalties of up to 70% that can otherwise be charged if HMRC catches you out."

 

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By juliekpb
04th Mar 2011 11:00

Tax Amnesty for Plumbers

The guide offers the forms for non-plumbers to make a declaration but does not appear to offer them the same favourable penalty terms.  Is this how everyone else reads it?

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By weaversmiths
04th Mar 2011 11:27

Plumbers

"HMRC has stressed that it is only a minority in the trade who do not fully declare their taxes."

Fell off my chair laughing - HMRC still have their head in the sand.  All this means is that plumbers who are already in the system will have their accounts investigated, it is always the easy target they go for.  I used to do Black Economy (Compliance) whilst moving within the world of snooker and pool in my spare time - what a conflict of interests(:-).  Needless to say I still have friends? 

Luckily I dont act  for any plumbers at present, but I have a few plasterers, electricians, bricklayers etc so we should be OK for a couple of years whilst HMRC do a bit of chestbeating to show their success.

TheAncientOne

 

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By taxtroubleshooter
04th Mar 2011 15:10

Up to 20 years also possible under PTSP

Contrary to the impression the original article gave (at least, to me) the PTSP also requires disclosures to include years before 2005-06 in relevant circumstances and is not, therefore, that dissimilar in scope (LDF apart) to the previous plans/facilities. The key passage is on page 21 of the guidance:

HMRC expect most people to have to pay a maximum of six years but there will
be some who need to pay more. These are people who have been in business
since before 6 April 2005 who have either:
 Deliberately told HMRC they have earned less than they have 
or
 Have deliberately not told HMRC anything at all about their plumbing income.
If this is you, you may need to pay up to 20 years.

I share others' misgivings about the low level of HMRC publicity around the PTSP to date and, given the current economic climate, would be sceptical about the level of take-up as a result.

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By julian.sims
04th Mar 2011 17:45

How generous is the PTSP?

I think @taxtroubleshooter has got it right and the number of years will depend on previous behaviour and could be in excess of the five years mentioned in the original post.

This does not appear as generous as could be thought. 

There appears to be a penalty discount to 10% / 20%, but this will be most significant for 2009/10 onwards where new penalty rules apply.  Under old rules with reductions for disclosure, co-operation and seriousness, penalties would probably have been relatively low anyway.

Also there does not appear to be any reduction in the number of years to be dealt with which as above could be up to 20 years.

I guess we all need to try and help with the publicity and ensure that taxpayers take proper advice rather panicking into their own disclosures.  I see more value to being able to argue for a maximum 10% penalty for carelessness or a 20% penalty in deliberate cases given the statements on page 9 about 'very similar terms'.

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By johnjenkins
07th Mar 2011 10:03

Amnesty?

I agree with The AcientOne.

You can't have an Amnesty and then put restrictions and penalties on it. Interest on loss of tax - yes.

HMRC need to look at putting a stop on penalties, consultative documents etc. for 12 months so that we can all play catch -up or "ketchup" if your a pulp fiction fan.

With the advent of "travellers" coming into the fold it would make more sense.

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By spurs1952
09th Mar 2011 07:30

HOW MUCH TAX

 Will they levy a 5% tax levy only if they pay Cash!!!!!!!!!!

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