HM Revenue & Customs (“HMRC”) have today announced the launch of the “Tax Catch-Up Plan” (“TCP”) aimed at regularising the tax affairs of private tutors and coaches who may have not disclosed to HMRC all of their income. The Plan allows any tutors or coaches an opportunity to bring their tax affairs up to date in a structured way and with a limited penalty which is significantly lower than could be expected in a normal tax enquiry.
Earlier this year HMRC announced that tutors and coaches would be a target for compliance activity. Since July HMRC have been writing to colleges, schools and other organisations requesting information about payments made to individuals which haven’t been taxed under PAYE, and it is expected that more than 300 formal Notices will be issued. Colleges and others are legally obliged to comply and supply the information. In addition extensive research has been carried out on the Internet to locate tutors advertising their services but who may not have been declaring all of their income.
Under the terms of the TCP tutors and coaches have until 6 January 2012 to notify HMRC that they have a disclosure to make, and until 31 March to actually make the disclosure itself and any payment due. The opportunity is available to anyone who falls within the scope of “tuition or coaching” even if the disclosure relates to other income or gains unconnected with that work. The main exception to this will be if the disclosure relates to monies held in offshore bank accounts or deriving from criminal activities. Any tutor or coach who is currently the subject of an HMRC investigation will not be eligible for the TCP.
HMRC anticipate that “most” of those making a disclosure will only have to make good tax for a maximum of 6 years, but where the disclosure is of a more serious nature, or HMRC believe that the individual has deliberately not paid enough tax, then this can be extended. Similarly the level of penalties range from 10% to 20%, which is significantly less than the minimum of 30% and maximum of 100% charged in a normal tax enquiry.
The TCP offers no immunity from criminal prosecution for those making a disclosure, but HMRC state that it is “unlikely” that anyone who comes forward would be prosecuted and experience tells us this is only likely to happen if someone deliberately understates what they owe when making their disclosure. If you believe your circumstances are particularly serious we can help by exploring other options available to you to best protect your position.
Anyone who believes they may be affected, or that they have a potential disclosure to make, should take urgent advice. There is a strict time deadline and anyone who fails to make a disclosure will be at increased risk of investigation with higher penalties, or at worst criminal prosecution.
At WMT we have considerable experience in helping clients in making disclosures to HMRC. We work with you in a sympathetic and non-judgemental manner to present the facts to HMRC in the best possible light ensuring a greater chance of your disclosure being accepted without question and a lower level of financial penalty. To discuss your options, please call Peter Davies or Paula Jeffs on 01727 838 255.
