South: HMRC 'targeting middle classes'

HMRC is taking an increasing tough stance on middle class tax evasion, with a new disclosure opportunity exclusively targeting doctors and dentists.

This new disclosure opportunity follows closely on the heels of a disclosure opportunity aimed at those with off-shore bank accounts and assets which, by the HMRC’s own admission, delivered a disappointing response and marks an increasingly tough stance against the middle class professions.

Mark Herson, a director in the Private Client team at Thames Valley accountants and business advisers James Cowper, said: “Deliberate tax avoidance is illegal and cannot be condoned yet this new disclosure opportunity is the first that I can remember that targets exclusively middle class professions and really does demonstrate the difficult position Alastair Darling has found himself in.

“It is inevitable that just by pointing the finger at doctors and dentists individuals will come forward, but it is difficult to see this disclosure opportunity delivering any significant revenues. It is safe to assume that this is just the first of many new disclosure opportunities aimed at the professional classes – maybe accountants and lawyers will be next!”

James Cowper offers this advice to those who doctors and dentists who believe that they may have an outstanding tax liability:
• Do not approach HMRC directly without first speaking with your accountant or tax adviser. HMRC are not overly tough negotiators, but it can be extremely complex and without detailed knowledge of the tax system could lead to a larger tax bill and penalty than necessary.
• Do not ignore the disclosure opportunity. It is possible that HMRC is already aware of your financial details and the penalties for non-disclosure could mean a penalty of 100% of the tax liability and a criminal prosecution
· If you are employed it is likely that your employer will have taxed earnings at source. However, if self-employed it would be advisable to ask your accountant or tax adviser to review earnings, year-end accounts and tax paid. Any liability can be properly assessed and disclosed.

Mark adds one further note of caution: “HMRC will be obtaining earning details of doctors and dentists from NHS Trusts and then matching these against filed tax returns. There is little chance of individuals going unnoticed. This disclosure opportunity cannot be ignored or avoided.”

This latest disclosure opportunity closes on March 31, 2010, leaving little time for doctors and dentists to react.