Tax man gives solicitors three months to come clean on undeclared income


Tax: six months to pay

HM Revenue & Customs (HMRC) has opened up a three-month window for solicitors to own up to income they have not declared, or face tougher penalties if they are caught dodging tax.

The ‘Solicitors’ Tax Campaign’ is the latest of what HMRC described as a “voluntary, intelligence-led disclosure opportunity” that has to date raised nearly £1bn from targeting a host of other sectors, from doctors to plumbers.

Solicitors have until 9 March 2015 to tell HMRC that they would like to take part in the campaign, and until 9 June 2015 to disclose the tax they owe and pay it.

HMRC said that by using the campaign to come forward voluntarily, any penalties they might have to pay will be lower than if the taxman has to approach them first.

The penalty will depend on why the solicitors has failed to disclose income – deliberately keeping information from HMRC will result in a higher penalty that in case of a simple mistake.

In the case of a careless mistake, solicitors would only pay for a maximum of six years, no matter how many years they are behind with their tax affairs.

“However if you don’t come forward and HMRC finds later that you’re behind with your tax, it may be harder to convince HMRC that it was simply a mistake, the law allows HMRC to go back up to 20 years in serious cases or HMRC may carry out a criminal investigation.”

Once the 9 March deadline passes, HMRC said it will review the tax affairs of those customers it believes should have, but did not, come forward, identifying them by comparing the information already in its possession with customers’ UK tax histories, and continuing to use its powers to obtain further information about other payments made.

Caroline Addison, HMRC’s head of campaigns, 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.

“If you have not declared all of your income, you need to put your tax affairs in order. 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.

“Those who make a deliberate decision not to pay the taxes due could face a penalty of 100% or more of the tax due, or even a criminal prosecution.”




Blog


Fifteen years on: Lessons from ABS reform

Fifteen years ago this month saw the very first alternative business structure. At the time, the prospect of non-lawyers owning law firms was dubbed ‘Tesco Law’.


Hybrid working and client money controls – be aware of the risks

For legal finance teams, remote working has changed how information moves, how approvals are obtained and how colleagues communicate.


AI can interrogate your contracts – but are they ready for questioning?

Suppose a law firm wants to review a client’s entire real estate portfolio for risk in the leases. Not long ago, that meant a multi-week project. Today, first-pass answer can arrive in minutes.


Loading animation