CIOT: Doctors’ orders – HMRC issue final warning to 2500 health professionals
2,500 doctors and dentists need to stop hiding behind their masks when they receive letters in the next few days warning them that the taxman knows their tax affairs are not up to date, as HM Revenue and Customs (HMRC) step up their Tax Health Plan.
The letters warn that, if the medics do not come forward to put things right within 21 days. HMRC will either ‘make a determination’, which would result in the taxpayer incurring significant additional charges, or refer the case to their Criminal Investigations department with a view to prosecution.
Gary Ashford, who represents the CIOT on HMRC’s Compliance Reform Forum, and is National Head of Tax Investigations and Dispute Resolution at RSM Tenon, commented:
“These are 2,500 health professionals who HMRC are not giving a clean bill of tax health to.
“HMRC made clear at the launch of the Tax Health Plan in January 2010 that they would be adopting a carrot and stick approach. They have offered the carrot of a relatively low penalty rate for doctors to get their affairs in order and 1500 health professionals took it up, bringing in £10 million for the Exchequer. Now they are wielding the stick at those who have not come forward.
“People should not underestimate the amount of data that HMRC is holding. They have been talking to medical insurance companies, pharmaceutical companies and locum agencies. What we are now seeing is HMRC starting to use that information, to identify who has not notified HMRC of all their tax liabilities.
“HMRC are adopting an increasingly sophisticated approach to their campaigns. As well as threats of prosecution, some of the letters in this latest offensive show that the taxman has adopted ‘nudge’ theory, trying to shame doctors into acting by pointing out that the public put trust in them and that most of their colleagues manage to keep their tax affairs in order.1
“The plumbers ‘tax safe plan’ has seen nine arrests since the disclosure opportunity ended in August. Doctors should be clear that not coming forward is a prescription for a very tough penalty, potentially even prosecution.
“Anyone who is worried that they have been underpaying tax – whether deliberately or in error, and whether they are doctors or anyone else – should get professional advice without delay. Penalties will generally be less severe for taxpayers who come forward voluntarily to put their affairs in order with HMRC.”
HMRC have told members of their Compliance Reform Forum that the next two campaigns they will launch will be targeting e-marketplaces (launch in early 2012) and electricians (launch in February 2012).
Notes to Editors
1. One variation of the letter being sent out by HMRC opens with the information that:
“9 out of 10 people surveyed by Ipsos MORI in 2011 said that they trust their doctor to tell the truth. This makes doctors the most trusted profession in the UK. In keeping with this, our records show that 97% of doctors have filed all their tax returns for the last 4 years.”
In a Radio 4 interview in September 2011, Richard Thaler (co-inventor of ‘nudge’ theory) highlighted that preliminary analysis of work he was doing with HMRC on wording of tax demand letters indicated that an approach of “mostly being nice” and pointing out “most people pay their taxes” led to a 10% higher yield than some alternate approaches. The UK Government’s eight person ‘nudge unit’ – technically called the Behavioural Insights Team – was set up in July 2010 and is the first of its kind in the world.
2. The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.
The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members’ experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.
The CIOT’s 15,600 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.
George Crozier
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The Chartered Institute of Taxation
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