Recent HMRC enforcement activity and future approach

On 4 October 2013 HMRC announced the launch of the Health and Wellbeing Tax Plan, a new voluntary disclosure opportunity for those working in the medical and health professions.  The opportunity will run from 7 October 2013 to 6 April 2014 and will be open to professionals working in the following areas:

  • Physical therapy – eg physiotherapist, chiropractor, chiropodist, osteopath, occupational therapist.
  • Alternative medicine or therapy – eg homeopathy, acupuncture, nutritional therapy, reflexology, nutrition.
  • Other therapy – eg psychology, speech therapy, arts therapy.

Those wishing to take part should notify HMRC by 31 December 2013 and provide details of the disclosure and payment in full by 6 April 2014.  The benefits of disclosing through the facility are detailed by HMRC as follows:

  • Penalty – HMRC guidance states that ‘you can tell HMRC how much penalty you believe you should pay’, advising that the level of penalty will depend on whether you have been careless or deliberate in failing to submit accurate returns.  It is not clear how this will work in practice and whether HMRC will deviate from the statutory minimums defined for careless or deliberate behaviour.
  • Time to pay – HMRC will consider requests to spread the payment of tax, interest and penalties, depending on the circumstances of the individual or entity concerned.
  • Historical duties – Those disclosing through the facility who have been careless in failing to pay the correct tax in previous years will only have to pay for a maximum of 6 years.  The implication is that those who fail to come forward during this time will face up to 20 years of assessments on the basis that they have acted deliberately.  As with the penalty position, it is not clear whether there is any real benefit here, as the 6 year time limit is imposed by the legislation in any case.
  • Avoid name and shame – on entering the facility and adhering to the terms throughout in making a full and accurate disclosure and paying what is due, HMRC will provide a guarantee that personal details of those involved will not be published.

As with all such campaigns, the usual restrictions for entry apply and those who were already the subject of an HMRC enquiry prior to 7 October 2013 will not be able to make use of the facility.  Those who wish to take part but are not working in the prescribed fields are encouraged to make a disclosure to HMRC but will not benefit from the terms of the campaign.

The use of disclosure facilities such as the Health and Wellbeing Tax Plan is one element of an interactive infographic produced recently by HMRC.  This visual tool is designed to provide an overview of HMRC’s approach to tackling tax evasion and avoidance and focuses on a number of core areas:

  • Global tax transparency
  • Toughening enforcement of the rules
  • Increasing the amount of information available to HMRC
  • Preventing avoidance before it happens

The infographic can be viewed here.

It is doubtful that it will assist in reducing evasion and avoidance, but it is a novel way and interesting way for HMRC to communicate!

Should you have a query regarding these new initiatives, or any other ongoing HMRC campaign, please contact the TaxDesk on 0845 4900 509 and ask for Isobel Clift.