HMRC has a wake-up call for doctors and dentists. If they have hidden something from HMRC then now’s the time to confess.
The tax folk are really getting into the idea that confession is good for the soul. Back in 2007 they had a ground-breaking amnesty for people who had hidden funds offshore and not paid the right tax. As they continued to obtain intelligence about offshore accounts they ran a similar initiative in 2009, for which people had to register by 4 January 2010.
The latest way of (easily) bringing the government a stash of cash is to target doctors and dentists. They are calling this the Tax Health Plan. I’m not so sure about the clever name – I suspect people will think it’s something their financial adviser will want to sell them. After medical professionals HMRC will move on to other professional groups, so watch this space!
So what is the Tax Health Plan (THP)?
It is a streamlined way in which health professionals can confess to previously undeclared tax liabilities and pay what’s due. They pay a penalty of just 10%, which is a lot better than if they wait until HMRC comes knocking. Chances are their money will be accepted with little further contact from HMRC.
The deadline to register for this THP is 31 March 2010 – so the clock is ticking. Once registered then the full disclosure and payment of the tax etc must be completed by 30 June 2010.
Sure doctors are decent, hard-working and honest people, why is HMRC coming after them?
Clearly the tax folk think there’s tax in them there pills, sorry, hills. HMRC has recently been obtaining information about payments made to medics which have not been taxed under PAYE. Such payments can come from work at private hospitals, working as a locum, from NHS Trusts and from work for private medical insurers. Armed with this information HMRC can check the file of a given doctor or dentist and see if they think the full income has been declared.
I know that my doctor and consultant clients derive their income from a variety of sources, only one of which is their main NHS salary. One can see the temptation to leave out some of the income when doing Tax Returns, and this is why HMRC is suspicious. Also if they find a doctor guilty of understating his income the tax involved will probably be at 40% - so the return for the Treasury will be healthy.
Let’s be clear, however about the purpose of this initiative. It is to allow doctors and dentists to come clean about any UK tax they owe. It could be CGT on the sale of a Donegal holiday home, or income tax on private medical earnings, or tax on rents from a villa in Tuscany. (Stop me if I am stereotyping.)
If you have a doctor friend or relative you should forward this article to them. If you are a doctor or dentist yourself then you need to check whether it might apply to you.
The THP does not guarantee that HMRC will refrain from prosecuting you, however unless your money is the proceeds of Serious Organised Crime they have said they will likely settle simply for you paying them the money they want. As for how a doctor’s income would be linked to Serious Organised Crime... well I guess you could be the medic for the Sopranos!
For our free factsheet about how doctors and dentists can tidy up their taxes under the THP just call us on 028 9080 6080 or email firstname.lastname@example.org
If you declare using this special scheme then you still have to pay whatever tax you owe – going back 20 years. The tax years involved at 1988/89 to 2007/08. Also interest from when you should have paid the tax until the month of payment. Finally a penalty at a flat rate of 10% of the tax. HMRC recognises that you may not have access to a full set of information to work out what tax you owe. They accept that often estimates will be needed.
If a doctor or a dentist has something they have not paid tax on, and they do nothing by 31 March 2010, what happens?
Well, if HMRC has obtained information about their outside income they will first of all examine their tax file. If the income clearly is not there then a tax investigation will follow. If some outside income is shown, then HMRC might launch an enquiry to see which payments have been declared. If the doctor has declared all their income from BUPA, but omitted the PPP income, then they will be in bother and will face a more rigorous tax investigation, as well as a penalty likely to be 30% or higher. Up to 100% of the tax evaded.
If you want to register with HMRC to confess under the Tax Health Plan you can call HMRC on 0845 600 4508. You need to have your National Insurance Number to hand and if you are regulated with the GMC then you will need your GMC Registration number.
Does this mean the tax folk will grass you up to the GMC? No, absolutely not – they regard your tax affairs as confidential and won’t tell the GMC or your employer.
You can read more about doctors declaring their old tax bills on the HMRC site at http://tinyurl.com/y9ozfj8 from where you can click on the Frequently Asked Questions.