Are you an electrician needing to sort out your tax?

Published on 17 February 2012

HM Revenue and Customs (HMRC) have announced the Electricians Tax Safe Plan (ETSP) to encourage those who work in the electrical industry and who have not disclosed their earnings to HMRC to come forward. HMRC will soon follow this up by sending 50,000 letters to electricians who may have income to declare urging them to get their tax affairs in order.

The ETSP is the second part of an HMRC campaign aimed at tradespeople. The first, targeting plumbers and heating engineers, has so far led to ten arrests and thousands of investigations.

To be eligible for the Electricians Tax Safe Plan (ETSP), an electrician is defined as anyone who installs, maintains and tests electrical systems, equipment and appliances under stringent safety regulations.

Electricians who take advantage of this ‘disclosure opportunity’ will face a penalty rate of 10-20% of the tax owed, in addition to the tax itself, rather than the usual rate of up to 100%. Those who have failed to disclose earnings but do not come forward could ultimately face criminal charges.

If you are working in the electrical industry and have not told HM Revenue & Customs (HMRC) about all your income and you now want to sort out your tax affairs, you will be able to use the Electricians' Tax Safe Plan (ETSP).

Who can use the Electricians' Tax Safe Plan (ETSP)?

If you have not yet told HMRC you have started working for yourself, and/or you have not disclosed all your income, then it is likely that you will not have paid the correct amount of tax. If so, ETSP is being offered to help you get your tax affairs up to date.

If you use the ETSP to tell HMRC about any income previously undisclosed:

  • you may only have to pay for a maximum of six tax years
  • you can tell HMRC how much penalty you should pay
  • you may be able to pay what you owe by instalments

HMRC say they take the view that this is basically a 'fresh start' - a chance to start getting things right from now on, whilst knowing exactly how much it will cost you to sort out things for earlier years.

As we commented when the plumbers campaign was announced you need to be aware that disclosures can affect tax credits and other means tested benefits that you may have claimed.

Complexity

The disclosure process is fairly complicated with detailed notes to read, calculations to do, jargon to understand and difficult judgement calls to make.

Our advice therefore is to employ a professional tax adviser, particularly if you are disclosing figures for a number of tax years.

How to notify HMRC under the ETSP

To take advantage of the Electricians' Tax Safe Plan you must:

  1. Notify HMRC of your intention to take part by 15 May 2012. This is a simple process (we provide links below to instructions to help you) and can be done online, by phone or by post. At this stage you only need to tell HMRC that you will be making a disclosure.
  2. Once you have done this, you must make your disclosure and pay what you owe by 14 August 2012 .

To read more about how you notify your undisclosed income under this campaign, HMRC have provided a flow diagram with a narrative guide for those who prefer the information in list form.

You can then use the following link to see a detailed summary setting out how you can go about making a disclosure under ETSP.

There is further general information on the HMRC website on making a disclosure under the current HMRC campaign.

What if I am not an electrician but want to get my taxes up to date?

If your undisclosed income is not covered by the ETSP campaign you should phone the Campaigns Voluntary Disclosure Helpline on Tel 0845 601 5041.

Who will be targeted next?

On 14 March HMRC will begin another campaign aimed at those who trade goods and services online. This online market is used by many people but often only to sell personal possessions. Knowing when this personal activity becomes a business will be crucial in deciding whether a disclosure is needed. HMRC have given their views on this on their website and we will aim to post further information on this shortly.

(17-02-12)

Contact: Jan Tish (please use form at http://www.litrg.org.uk/ContactUs)