The New Tax Health Plan - How Fair Is It?
HM Revenue & Customs announced its new Tax Health Plan offering reduced penalties to medical professionals, but is the exclusive deal fair on everyone?
One of the biggest announcements to come from HM Revenue & Customs (HMRC) in January 2010 was the unveiling of the new Tax Health Plan (THP).
While the rest of the UK was fretting about the reversion of VAT to 17.5 per cent, those working in the medical profession were issued a stark warning about undeclared income.
"Contact us before we contact you", came the cry from HMRC director of risk and intelligence Mike Wells.
In a similar way that the New Disclosure Opportunity offered beneficial penalty rates to people with undeclared savings in offshore accounts, the new THP encourages Doctors with undeclared or understated incomes to come forward by March 31st 2010.
Those taking advantage of HMRC's new offer would have their tax issues dealt with "simply and on the best available terms", continued Mr Wells.
By admitting to the undeclared amounts, medical professionals stand to benefit from a reduce penalty charge of ten per cent.
However, the HMRC statement seemed to be aimed more at those who intend to escape the law and reminded them that if caught by an investigation they could face penalties of up to 100 per cent.
Some could even face criminal prosecution, HMRC warned.
Upon launching the THP, Mr Wells commented: "Our aim is to make it as easy as possible for people to come forward, make a full disclosure and benefit from the certainty of a reduced ten per cent penalty that HMRC is making available to those who qualify for this opportunity.
"This is the first step in enabling those with undisclosed income or gains to avoid a full tax investigation together with much higher penalties. The message is clear: contact us before we contact you."
The offer then prompted calls from the Chartered Institute of Taxation (CIOT) asking for fairness for all taxpayers.
"Whilst we welcome HMRC encouraging people to get their tax affairs in order, there is a measure of unfairness in offering a deal to one sector of the population and not to others," said Gary Ashford, chair of the CIOT's management of taxes committee.
"Surely it would be better to have a general arrangement available to all and a concerted effort by HMRC to get their message over?" he added.
The CIOT also voiced concerns about the way in which HMRC was offering various offers at various times.
According to the organisation, the fact that different disclosure facilities are being offered to a variety of sectors with "short time windows" is "not ideal".
Mr Ashford claimed that the knock on effect could be that other people wishing to get their tax affairs "in order" may contemplate waiting to see if a disclosure opportunity that will benefit their chosen industry might be offered.
"It would be sensible to consider a genuine one off disclosure for everyone," continued Mr Ashford.
"And one that lasts sufficiently long and is sufficiently attractive to get people to come forward.
"This could enable them to clean the slate before the advent of the harsher ‘Naming and Shaming' rules that come in from April 2010."
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