 HMRC woos electricians with Valentine's Day amnesty
14 February 2011: HM Revenue & Customs (HMRC) has today launched the Electricians Tax Safe Plan (ETSP) to woo electricians who have been less than honest with their tax returns into owning up and putting things right at a relatively low cost.
John Cassidy, tax investigation and dispute resolution partner at PKF, comments: “As with all previous sector specific tax amnesties, HMRC will have done sufficient homework on electricians to know who is likely to have underpaid tax. I suspect that electricians who are registered with any industry body but have never sent in a tax return will be at the top of HMRC’s hit list for an enquiry or prosecution if they do not use this amnesty.”
“Although HMRC has offered a tax amnesty to electricians, it is backing up its campaign by using many information sources to identify electricians and then check their tax records."
“There is no suggestion that any particular regulatory body is being singled out for attention by HMRC, any organisations that have contact with numbers of electricians – from regulators to construction companies and even suppliers – could be approached by HMRC to supply bulk information on electricians. HMRC has the power to demand data from a wide range third parties and is increasingly using it."
“Electricians who advertise online are also likely to be identified by HMRC’s web-based data collection software."
“Any electricians, whether they registered or not, who have not fully declared their income could be a target if they do not use the ETS.”
Electricians who want to use the ETSP to come clean on past tax arrears must register for the scheme by 15 May and will need to pay any back taxes plus interest and penalties by 14 August. The tax penalty rate to be paid will depend on individuals’ circumstances. Where individuals have underpaid tax because of making careless mistakes with their tax returns or have forgotten to tell HMRC that they have started up in business, tax penalties will be limited to between zero and 10% of the tax due - cheaper than the 30% penalty that could otherwise be charged in such situations. Where individuals have deliberately understated their income or not told HMRC that they have started trading, tax penalties will be limited to 20% - still much cheaper than the penalties of up to 70% that can otherwise be charged if HMRC catches you out.
A further amnesty for e-marketplace traders is due to be launched in March and there will be further disclosure facilities for other tradespeople in the future.
The ETSP is not billed as a general tax amnesty for all UK residents but, as with past amnesties, individuals working in other sectors ought to be able to make a voluntary disclosure of tax problems and get the same good penalty terms.
John Cassidy says: “HMRC is favouring the carrot over the stick - it is doing research to identify likely tax cheats and then giving them a final offer to put things right on relatively generous terms. It could collect more money through larger penalties if it simply raised enquiries without warning. So, while it will cost electricians to use the ETSP to bring their tax affairs up to date, there is no doubt that this is a very good deal for anyone who may not have been entirely upfront with the tax man in the past.”
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For further information, please contact: Andy Konieczko, 020 7065 0537, andrew.konieczko@uk.pkf.com
Notes to Editors:
1. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in over 20 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk
2. PKF (UK) LLP also offers financial services through its FSA authorised company, PKF Financial Planning Limited. PKF (Isle of Man) LLC is a limited liability company registered in the Isle of Man. PKF (Channel Islands) Limited is incorporated in Guernsey.
3. PKF (UK) LLP is a member firm of the PKF International Limited (PKFI) network of legally independent member firms. The PKFI member firms have around 2,200 partners and more than 21,000 staff in around 125 countries.
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