The Plumbers' Tax Safe Plan (PTSP) is HM Revenue & Customs' latest tax disclosure scheme. It is open until 31 August 2011. The Chartered Institute of Taxation (CIOT) points out that this amnesty is open to all taxpayers.

Under the PTSP plumbers (and other taxpayers) are given the opportunity to fix any leaks in their tax affairs, by making a voluntary disclosure to HMRC. In return they will be offered lower penalties.

Why plumbers?

This opportunity is not just open to plumbers, however, HMRC have decided to target plumbers because:

  • Registered plumbers can be traced by HMRC via Corgi and Gas Safe registration.
  • Plumbers have been singled out (HMRC's previous disclosure opportunities have been to medics and those with offshore income and gains) because they do a lot of cash work.
  • A plumber in receipt of cash may have not have declared all his income, or registered for VAT.
  • Many plumbers are self-employed and so have the potential to incorrectly claim expenses for working from home, for home to work travel and for subsistence.
  • Training to become a plumber is costly, and some plumbers may have been tempted to incorrectly claim the cost of the training and course fees required to obtain their registration.

Similar points apply in repect of a number of other trades in the construction and home improvements or maintenance market.

HMRC are saying that if anyone else voluntarily comes forward to put their tax affairs in order they can expect broadly the same terms to those on offer through the Plumbers' Plan. This appears to amount to a General Disclosure Opportunity, something that the CIOT and others have been calling for.

Gary Ashford, Chair of the CIOT’s Management of Taxes Sub-Committee, commented:
“Despite the focus on plumbers, HMRC have today effectively announced a general disclosure facility open to anyone with tax irregularities...The terms of this offer are good but there remains an unfairness in that only those with offshore assets at 1 September 2009 and a current Liechtenstein asset can use the LDF which offers more favourable results."

“The guidance and new penalties for the PTSP are incredibly complex. It is unrealistic of HMRC to expect plumbers – or any non-tax expert – to read and understand this. HMRC need to communicate it in a more user-friendly way. The self-assessment of the penalty within the PTSP is new. This means that those taking advantage of the facility need to be very careful in deciding what behaviour led them to get previous returns wrong; if HMRC judge them to have got their self-assessment declaration wrong deliberately they could find themselves with a criminal investigation against them, or at least a higher penalty."

“My advice to anyone who thinks they may be within range of this new facility or the LDF is to take it seriously and get professional advice."

Under the new tax penalty system that applies for errors from accounting periods in or after 2008/09, a voluntary disclosure of an error caused by careless, but not deliberate behaviour will not attract a penalty, however, the penalty for disclosure of an error caused by deliberate behaviour will attract a minimum penalty of 20% to 30%.

Penalties under the old system (returns for 2007/08 and earlier) are only due when negligence is proved.

Penalties under the new PTSP amnesty are as follows:


Circumstances

Penalty if you come forward in this PTSP

Penalty if HMRC find out you have not paid enough tax

If you have not paid enough tax despite taking reasonable care with your affairs, you will not pay any penalties at all.

You sent HMRC a return showing less tax payable than the correct amount because you had been careless.

10% of the tax due

No penalty at all for 2008/9 & 2009/10

Up to 100% of the tax due

Between 15% and 30% of the tax due

You started trading, haven’t told HMRC about it or sent HMRC a tax return, but you weren’t deliberately trying to keep the information from them.

10% of the tax due.

No penalty at all for 2009/10.

Up to 100% of the tax due

Between 15% and 30% of the tax due

You deliberately failed to tell HMRC you had started trading.

20% of the tax due.

For years up to 2008/9, up to 100% of the tax due.

Between 35% and 70% of the tax due

You deliberately sent HMRC a return showing less tax payable than the correct amount in order to understate your tax bill.

For years up to 2007/8, up to 100% of the tax due.

Between 35% and 70% of the tax due

You may have to pay penalties of up to 100% of the tax due if you tried to conceal the extent of the undeclared tax.

Interest is also due on any tax or NICs due.

Links

For assistance in making a disclosure, or enquiries relating to the LDF, please contact our tax enquiry experts on the Virtual Tax Partner support line.

For links to forms for notification and disclosure click here.

For guidance HMRC Plumbers Plan

 

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