'Amnesty' on medics' tax returns

MARILYN MARTIN of chartered accountants PKF explains why opportunity knocks for dentists or doctors with skeletons in the cupboard

MARILYN MARTIN of chartered accountants PKF explains why opportunity knocks for dentists or doctors with skeletons in the cupboard

HM Revenue & Customs (HMRC) believes that some medical professionals and dentists fail to declare all of their medical earnings on their tax returns to avoid paying tax.

Not surprisingly, it wants to stop this and has launched a special tax amnesty - the Tax Health Plan (THP).

In truth, it is not really an amnesty as users will still need to pay the outstanding tax and interest charges for paying it late, but they will save considerable sums on tax penalties. Under the THP, penalties are fixed at 10% but, outside the amnesty, penalties of up to 100% are possible and 30% penalties are common.

HMRC already has details from the NHS and insurance companies of payments made to individual medical professionals. It is also understood to be interested in over-claimed expenses for travel, wages paid to family members (MPs led the way on this) and use of their home as an office.

HMRC has said it plans to launch tax enquiries against those who do not cooperate. So, this is a simple carrot and stick approach: reduced penalties for those who own up, but the threat of a full tax investigation for those who do not.

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Initially, only medical professionals registered with the General Medical Council (GMC) could use the THP. However, after some confusion in the press, HMRC included dentists in the amnesty. At the same time, it emerged that HMRC plans to offer similar opportunities to other professional groups, including other health professionals, soon. Individuals already under enquiry by HMRC or whose disclosure includes income from 'serious organised crime', for example, leading to a police investigation, are unlikely to be able to benefit from the THP terms.

The process is relatively straightforward: those who want to use the THP must register by March 31, 2010. A completed disclosure pack must then be submitted to HMRC by June 30, 2010 along with a full payment.Users must report all undisclosed UK income and gains from any source over the last 20 tax years; for example, any undeclared rents from letting a property as well as undeclared medical earnings. However, only those who have previously failed to declare some medical earnings are eligible.

Any unreported income or gains from overseas assets must also be declared by THP users but these will be subject to penalties at the normal rates. In this regard there may be other options but I do not have space to cover them here, and in any case they will not impact on the vast majority of those affected.

A detailed briefing on the THP is available at www.pkf.co.uk/thp . If you have tax irregularities to disclose the sensible option is to come clean now but it is vital to seek expert advice on which of the current amnesties is most cost-efficient for you.