The Plumbers Tax Safe Plan (PTSP) highlighted in our article in March this year is still open, although HMRC’s original notification deadline of 31 May has now passed. Full disclosure and payment of the tax due must be made by 31 August.
HMRC have confirmed, however, that it is still possible to register by phoning the helpline on 0845 600 4507 to obtain a disclosure reference number so long as you make the full disclosure and settle, or agree a payment schedule, by the 31 August deadline. We understand from HMRC that they will not guarantee that people coming forward after the deadline will receive the same terms, but they will be sympathetic to those coming forward before they are contacted and people can expect terms broadly similar to those set out under the original deal.
The complexities of making a disclosure
We have been urging HMRC to simplify the notification and disclosure procedures and to provide clear information, as we feel that their methods are complex and not designed to encourage large numbers of people from the informal economy to come forward. Unfortunately, little progress has been made, and therefore our advice is still to seek professional help where possible if you find yourself needing to make a disclosure.
HMRC say that, to date, some 600 people have come forward in response to the PTSP and indicated they will be making a disclosure. This low figure appears to bear out our previous concerns as to the scheme’s complexities and, as we anticipated, HMRC will now be enquiring into the tax affairs of those who have not come forward but who they believe have under-declared, or failed to declare, income from plumbing and related activities. Letters will be coming out during July and anyone who receives one would be advised to seek professional help, particularly if it is likely that they will have tax to pay.
Unfortunately, voluntary sector resources are stretched and availability of free advice is usually limited to those on the lowest incomes. If you can afford to pay for help, you should contact a tax adviser.
The next targets
HMRC also believe that information they have gathered using new internet search tools which they unveiled last month will enable them to target many more individuals and businesses whose trading activities are currently not known to them.
The next campaigns will be aimed at private tutors and those undertaking e-trading activities, both of which are areas where those on low incomes may be looking to earn extra money but have not fully appreciated the tax consequences.
For those buying and selling on eBay or similar sites, knowing when HMRC consider this to be a taxable trading activity and not just private sales and purchases is important. And whilst HMRC’s website does have information setting out their views on this, many people are likely to be unaware of it. Moreover, the view of what constitutes a trade by HMRC's income tax investigators may differ from HMRC's tax credits administrators. We will aim to post a further piece highlighting those differences in due course.
Contact: John Andrews or Jan Tish (please use form at http://www.litrg.org.uk/ContactUs)