Medical Professionals At Risk Of A Tax Investigation

Tax Investigation

18.01.2010

Medical professionals are being offered a new kind of Health Plan.  In the first of a new campaign targeting professional people HM Revenue & Customs (HMRC) is offering a short window of opportunity for those who have failed fully to declare their income over all or part of the 20 years from 6 April 1988 to 5 April 2008.

The message from the tax authority is simple.  Any Medical Professional (which is not defined but would probably include most consultants, doctors and anaesthetists) who has failed to declare all his or her income is at risk.  HMRC has obtained information from various sources about payments made to medical professionals which indicates that not all such payments have been disclosed for tax purposes by the recipients.  A stark choice is on offer from HMRC to either:

  • a) Come forward, make a full disclosure and pay tax on the undeclared income, interest and a penalty of 10% on the tax; or
  • b) Face being identified, and risk an in depth and "targeted investigation" leading to formal assessment for the unpaid tax, interest and a penalty on the tax of up to 100%.  There is also the possibility of a criminal investigation and prosecution.

The Tax Health Plan ("THP") is claimed by HMRC to be "designed to make it easy for customers to put their tax affairs right and keep them that way".  This is a laudable aim, but experience suggests it would be advisable to take legal advice before making a disclosure.  Unlike another HMRC disclosure facility which is currently in place, the THP does not include an amnesty or an ability to discuss coming forward on a no names basis and so even those who do come forward may not qualify and could still be prosecuted in certain serious cases.

It operates in two stages and the timescale is extremely tight:

  • Between 11 January and 31 March 2010 medical professionals can register with HMRC their intention to make a voluntary disclosure
  • By 30 June 2010, those who have registered must have made their disclosure as well as arrangements to pay all tax, interest and penalties due