Government offers olive branch on undisclosed income
Chiks tax partner David Bennett is urging people with undisclosed income to come clean in a new ‘amnesty’ introduced by the taxman.
HM Revenue and Customs has introduced a tax disclosure initiative called the Plumbers Tax Safe Plan (PTSP) which will allow plumbing and heating professionals to report any undeclared tax to HMRC with a reduced penalty.
However, David stresses that the terms set out under the tax amnesty means it will be available to anyone who comes forward to disclose an undeclared tax liability, and not just plumbers.
He believes the initiative will help those who have fallen foul of the law by mistake or through a misunderstanding of the rules.
David said: “Many self-employed tradesmen and other sole traders who are paid in cash may be tempted not to declare some of that income, or they may have made genuine errors with tax returns which have then gone unreported once noticed. Those with undeclared income are breaking the law and sitting on a ticking time bomb.
“This practical initiative should be welcomed by those who think they have underpaid tax as it gives them an opportunity to put their affairs in order with a much lower penalty than might otherwise be charged.”
Taxpayers wishing to take advantage of PTSP must notify HMRC of their intention to disclose by May 31 2011. The disclosure has to be submitted and any liability that arises paid by August 31 2011.
David added: “As ever with underpaid or undisclosed tax, there is a high risk of discovery and, if that happens, it is likely that a full investigation into the taxpayer’s affairs will be opened.
“Ultimately, this is far more time-consuming, expensive and uncomfortable than making a voluntary disclosure under the PTSP. I would always recommend specialist advice is sought if anyone is contemplating making a disclosure to HMRC as it is essential that the disclosure is correct and complete. HMRC can be expected to come down hard on anyone who makes partial or incorrect disclosures.’