THP: Frequently Asked Questions
Q. What is the Tax Health Plan?
A. It is an opportunity for medical professionals who have not paid the right amount of tax to do so without (in nearly every case) any HMRC investigation and with a smaller penalty than might otherwise arise.
Q. How long does the Tax Health Plan last?
A. It opened on 11 January 2010. Users must notify HMRC by 31 March 2010 of intention to make a disclosure. Details of the disclosure and payment must be made by 30 June 2010.
Q. Does HMRC know about my income?
A. There is a good chance that it does or it will do. HMRC has powers to get information from third parties and has been collecting information about medical professionals’ income from health trusts, private hospitals, private medical suppliers and insurers. This process will continue.
There have already been quite a lot of investigations into doctors and other professionals based on this information and substantial sums have been found due.
Q. Is it just undeclared income HMRC will want tax on?
A. HMRC will expect professionals using the Tax Health Plan to sign a certificate that their returns are now complete. So it will be essential to check that all claims to expenses- such as motoring costs- are also correct.
Q. How many years of tax will HMRC want to recover?
A. 20 years up to the tax year 2007/08. Years after that can be sorted through your normal Tax Return although the deadline for submitting the SA return of income and gains online for the year to 5 April 2009 is 31 January 2010.
Q. Will interest be due on that tax?
A. Yes
Q. Will HMRC require a penalty and if so how much?
A. HMRC will want a penalty. The penalty will be 10% of the unpaid tax unless £1,000 or less of tax is involved when there is no penalty. HMRC say that if people do not disclose and after an HMRC investigation tax is shown to be due the penalty is unlikely to be less than 30% of the tax due.
Q. Why should I take part in the Tax Health Plan?
A. Sorting out one’s tax affairs in this relatively low key way will give certainty for the future, very probably avoid any risk of criminal prosecution, probably avoid a detailed HMRC investigation- which can be expensive in time, compliance costs and professional fees- and allow access to a reduced penalty.
Q. Is there any guarantee there will be no criminal prosecution?
A. HMRC will not give an absolute guarantee. However, HMRC say “with the exception of cases where we believe the subject of the disclosure is the proceeds of serious organised crime, a complete and unprompted disclosure will generally suggest that a civil course of action is appropriate.”
It is of course essential that any disclosure made now is correct and complete. Specialist professional advice is also essential.
HMRC also say that a person can make a disclosure under its normal Civil Investigation of Fraud (CIF) procedures. If CIF is offered to someone it comes with a guarantee of no prosecution if the disclosure is correct and complete. But the Tax Health Plan approach is not available to someone who wants to use CIF.
Q. Will I be investigated if I make a disclosure?
A. HMRC will not give an absolute guarantee that you will not. But if the disclosure is correct and complete it is very unlikely.
Q. I am being investigated by HMRC now but they don’t know about some income. Can I use the Tax Health Plan?
A. No. But tell the Inspector about the income.
Q. I have other tax problems to disclose to HMRC. Can they be included?
A. Yes. So long as there is a loss of UK tax related to income as a medical professional, then other tax underpayments can be included in the Tax Health Plan.
But any underpayment of UK tax should be disclosed to HMRC and it would be wise to take professional advice.
Q. What will happen if I have undeclared income but don’t disclose it under the Tax Health Plan?
A. HMRC say they will start comparing the information they have gathered with returns made by professionals. If discrepancies are identified HMRC will probably start an investigation. If extra tax is due the penalties will probably be a good deal more than under the Tax Health Plan. Professional fees could also be higher and the HMRC investigation could be intrusive and drawn out.
Q. What steps must I take to participate in the Tax Health Plan?
A. First you have to notify under the Tax Health Plan by 31 March 2010. Then you need to gather all the information to make the disclosure. And then make the disclosure and payment by 30 June 2010.
Q. Can I use an agent to disclose on my behalf?
A. Yes.
For professional, confidential and specialist advice call Iain Macleod at EDF Tax LLP on 07920 146800, or email imacleod@edftax.co.uk or complete our enquiry form.
