Latest tax amnesty – Plumbers and anyone with undeclared income

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Plumbers are the latest group to have been singled out for a closer look by HM Revenue & Customs.

HMRC are offering a “tax amnesty” to people in the plumbing industry to encourage them to disclose any past irregularities that have resulted in an underpayment of tax.

The amnesty – the Plumbers Tax Safe Plan (PTSP) – is also available if you are not working in the plumbing industry. You can still use the PTSP forms to advise the Revenue of your undisclosed income but you would need to make it clear on the form that you are not a plumber. The amnesty covers all taxes –  inheritance tax, capital gains, income tax – and not just earned income but includes investment income.

HMRC have been using their legal powers to obtain information about the plumbing industry and the people working in it. It will then cross check this information against tax returns made by plumbers to ensure there has been a full disclosure of all of their income.

HMRC have investigated other groups of individuals before, looking for undeclared income and also at the businesses expenses claimed. The Revenue is examining a whole sector and giving individuals concerned the chance to come forward before HMRC starts investigations that could lead to criminal prosecutions.

Disclosed omissions will be subject to penalties typically of 10% or 20% of taxes due. If an affected taxpayer does nothing and waits for HMRC to come knocking, the penalty can be as high as 100% of any tax due. A quicker, controlled disclosure may also be less painful than a lengthy intrusive investigation by an Inspector.

You have until 31 May 2011 to advise HMRC that you will making a disclosure. You then have to submit the details with a calculation of the tax and penalty due and make arrangements to pay the sum due by 31 August 2011.

If you are a plumber or an individual with undisclosed income for earlier years and are concerned by this development please do call me for assistance.

Sue Stephens

Tax Manager