Updated February 2010
For the first time a particular profession has been singled out for a closer look by H M Revenue & Customs.
They are offering a “tax amnesty” to the medical profession – an encouragement to disclose any past irregularities that have resulted in an underpayment of tax.
HMRC have even given the amnesty a name, the Tax Health Plan (THP).
The amnesty covers all taxes, inheritance tax, capital gains, income tax, and not just income from professional fees but includes investment income.
HMRC is in the process of collating further information from NHS trusts, private hospitals and medical insurers about payments made to medical professionals. It will then cross check this information against tax returns made by consultants, surgeons and doctors, etc, to ensure there has been a full disclosure of all of their income.
HMRC has investigated medical professionals before, looking for undeclared income from such sources as private fees or the rather morbidly termed ‘ash cash’ (crematorium fees), and also on the proportion of business expenses claimed. However, in the past these types of enquiries have always been one-offs aimed at a single individual. Now HMRC is examining a whole sector and giving the qualifying individuals the chance to come forward before HMRC starts investigations that could lead to criminal prosecutions.
Disclosed omissions will be subject to a fixed penalty of 10% of taxes due. If an affected taxpayer does nothing and waits for HMRC to come knocking, the penalty is likely to be a minimum of 30% of any tax due. A quicker, controlled, disclosure may also be less painful than a lengthy intrusive investigation by an Inspector.
If you are a medical professional and are concerned by this development please call and make an appointment. We have until the 31 March 2010 to advise HMRC that we will be making a disclosure and have to submit the details with a calculation of tax and penalty due before 30 June 2010.