Solicitors are the latest professionals to come under scrutiny from HMRC with the launch of a new campaign urging solicitors to come forward and bring their tax affairs up to date.
HMRC has obtained relatively good success from other campaigns (see below). The launch of a campaign is instigated because HMRC have researched and evidence the commercial success of such a campaign. HMRC would have gathered enough evidence to show that solicitors are under declaring income. Given the Connect system and information available to HMRC, it is likely they can identify which solicitors are under declaring.
Caroline Addison, head of campaigns for HMRC, said “Information gathered by HMRC has allowed us to identify solicitors who thought they could operate without declaring income and paying the taxes that others have to pay”. Ms Addison added that solicitors who come forward using this campaign will pay lower penalties. She also said “Those who make a deliberate decision not to pay the taxes due could face a penalty of 100 per cent or more of the tax due, or even a criminal prosecution.” Ending with “Take this chance to come forward and put things right in a straightforward way and on the best possible terms. It will be easier and cheaper for you to come to us than for us to come to you.”
This campaign gives solicitors the opportunity to bring their tax affairs up to date in a manner which is favourable for them. This applies to solicitors who are self employed, work within a partnership or work within a law firm.
If a solicitor chooses to disclose through this campaign they are likely to receive the best possible terms with HMRC. However, if not, HMRC will (eventually) investigate those identified. This could have serious consequences for those solicitors given HMRC view knowledgeable professionals who evade tax as potential candidates for criminal prosecution based on the principle they should have known better. It is therefore important that any solicitor entering the facility ensure they make all material disclosures and handle the process carefully. HMRC and professional bodies indicate that in these situations expert professional advice should be sought.
Solicitors have until 9th March to notify HMRC of tax liabilities and until 9th June to disclose what is owed.
If you have any concerns regarding the above or want further information, please contact Anton Lane (firstname.lastname@example.org /03332 074404).
HMRC has had much success with these campaigns in the recent past claiming to have collected nearly £1bn in total. £596 million directly from these initiatives and £338 million from follow-up activities. We have seen various campaigns aimed at different business sectors including: plumbers, electricians, restaurant owners, landlords, doctors and dentists. Below is a table which shows the revenue collected from each campaign:
|Campaign||Revenue as of December 31st|
|Tax Health Plan||£57,629,542|
|Tax Catch Up Plan||£1,920,273|
|Value Added Tax Outstanding Returns||£24,760,840|
|Plumbers Tax Safe Plan||£19,016,856|
|Electricians Tax Safe Plan||£1,636,693|
|Tax Returns Initiative||£80,784,866|
|My Tax Return Catch Up||£1,421,426|
|Offshore Disclosure Facility||£509,030,000|
|Offshore New Disclosure Opportunity||£123,530,000|
|Campaigns Consequential Disclosures||£3,689,051|
|Let Property Campaign||£7,852,753|
|Health Well Being Plan||£809,505|