Tax inspectors target health professionals such as doctors and dentists
Previously, the HMRC has focused on people in blue collar jobs, such as publicans and taxi drivers, when fighting tax evasion.
However, it emerged that they are now focusing their attentions on the accounts of white collar professionals earning more than £100,000. Tens of thousands of professionals are set to be targeted.
Experts were surprised at the nature of the middle class clampdown, with the Governments tax inspectors accused of unfairly targeting middle class professionals as “easy pickings”.
They suggested that chasing middle-class professionals for unpaid taxes had been forced on HMRC by the Treasury, which is desperate to raise funds to reduce the national debt.
HMRC said a “significant” minority of medical professionals were engaged in tax evasion.
Examples included not declaring fees for private work done for medical care providers, payments for private consultation work or cash sums for drafting medical reports.
Under a three-month ‘amnesty’, hospital consultants, GPs and dentists now have until March 31 to make a voluntary disclosure about any income they have not declared to HMRC.
In exchange, they will have to pay the outstanding tax on the undeclared income. They will also face a ‘fine’ of 10 per cent of the amount they owe – but, as long as they have admitted their undeclared income, the action will stop there.
However, anyone who refuses to reveal their unpaid earnings, and tax and is caught after the deadline has expired, faces criminal prosecution. They could also find themselves ‘named and shamed’ on HMRC’s website.
In certain circumstances, those found guilty of tax evasion can face a prison sentence of up seven years.
HMRC inspectors can issue formal notices asking people to hand over personal bank statements and business records if they have suspicions about them. They can also legally inspect business premises using their civil powers.
Potential tax evaders could also be tracked down by examining their previous tax returns, which might reveal that their latest tax situation was wrong.
Mike Wells, HMRC’s director of risk and intelligence, said that once the amnesty had expired at the end of March, HMRC would be “using the information at our disposal to investigate medical professionals who have not declared their full income”.
Phil Berwick, director of tax investigations at law firm McGrigors, said tens of thousands of people could be hit across several different professions. Targeting the medical profession alone was “without precedent”, he said.
“You are dealing with people in a position of trust and responsibility who do not want to be named and shamed. It is people who are going to be averse to naming and shaming and probably in a position to make a payment to the revenue,” he said.
“Compliance activity is usually costly and time-consuming for HMRC. By offering an amnesty HMRC is hoping to get a significant amount of tax into the Treasury’s coffers very quickly and at a reduced cost to itself.
“The parlous state of the public finances and the pressing need to reduce the deficit has probably forced HMRC’s hand to an extent.”
The middle-class initiative follows a previous HMRC amnesty scheme to allow people with off-shore bank accounts to declare how much tax they owed and pay a small fine. Around 10,000 people made use of the scheme.
Stephen Camm, tax partner at accountancy firm Pricewaterhouse Coopers, said: “In the past they looked at publicans, fish and chip shop owners and tax drivers – typical working class jobs. Now they are looking at professionals. And the middle classes will bear the brunt.”
Richard Limburg, from accountancy firm Vantis Medical Group, added: “It is likely that HMRC sees the medical profession, especially consultants, as easy pickings and this could raise substantial amounts.”
A British Medical Association spokesman said: “The BMA recommends that doctors who may have any concerns consult their financial adviser to ensure their tax affairs are in order.”
A spokesman for the British Dental Association said: “Dental practitioners work in NHS, private and mixed economy settings. Many are therefore used to dealing with their own tax affairs.