Ask The TaxWise Expert

Peninsula Team

May 13 2011

Q. I have seen in the press recently that H M Revenue & Customs (HMRC) have announced a new amnesty aimed at plumbers and heating engineers. If I need to utilise the amnesty how do I go about this and what is involved?  A. You are correct, HMRC has launched a new tax disclosure opportunity called the Plumbers Tax Safe Plan (PTSP). It is aimed primarily at plumbers and heating engineers who have not fully disclosed all of their income on their tax returns in the past. However, it is important to note that anyone in any trade or profession can use this disclosure opportunity presented by the amnesty to make a full disclosure of previously undeclared income to HMRC. If you use the PTSP disclosure opportunity to declare unpaid tax, one of the main advantages is you will be charged a lower penalty on the tax found to be payable. If you delay and do not use this opportunity and HMRC later find out about the under declaration, the penalty could be as high as 100% of the tax due, or 200% if funds have been deposited in off-shore accounts. To take advantage of the PTSP process you must first notify HMRC by 31st May 2011 that you wish to disclose. Your professional advisor will be able to help you do this and HMRC will respond with a disclosure reference number. HMRC will provide you will a formal disclosure form for completion. Once again it would be wise to seek the help of your professional advisor to help you in completing the form and calculating the outstanding liabilities. Once you have advised HMRC of your intention to use the amnesty you have until 31st August 2011 to fully disclose to HMRC all your undeclared income together with calculations of the additional tax liabilities arising. In addition you must pay all the tax, interest due on late paid tax, and penalties by that date as well. Unusually in making the disclosure you will have to decide on the level of penalty you consider appropriate to the circumstances surrounding the initial omissions. The options you will have are as follows; - Innocent mistakes have zero penalty; - Careless errors attract 10% penalty; and - Deliberate errors attract 20% penalty. As mentioned above it is essential to seek professional advice at all stages of the disclosure especially when selecting the penalty category. Admitting to a deliberate error could lead to serious sanctions and penalties in future if HMRC discover at a later date that you made an incorrect disclosure or if you make incorrect returns at a later date. If you consider the chances of HMRC discovering the incorrect returns as slim, you should remember that HMRC have access to a wide range of third party information. As part of the amnesty, HMRC have obtained information concerning plumbers and heating engineers from the Gas Safe Register. This information will be used and cross referenced against other databases to see who is trading as a plumber or heating engineer but are not registered with HMRC. If any doubt regarding the above issues, contact our Tax Advice Line on 01455 852555.

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