Pictured: Iain Macleod

With five arrests and 600 plumbers and gas fitters under investigation by HM Revenue & Customs, along with further campaigns in other sectors planned, the message from Iain Macleod at EDF Tax is anyone who thinks they have tax problems should disclose undeclared liabilities now for reasonable terms.

"Some of the plumbers under investigation owe up to £150,000, HMRC has confirmed," explains Iain, a former tax inspector for 26 years and now head of Tax Investigations at Nottingham-based EDF Tax. He continues:  "With more raids expected across the UK, HMRC sent a sure-fire warning that they will investigate and prosecute tax defaulters, not only in this industry but across all trades and professions."

HMRC announced in May it was setting up investigations teams that will specialise in specific industries, starting with the restaurant sector. A campaign targeting VAT failures was also launched in July and further HMRC campaigns targeting private tutors, e-marketplaces and other trades will begin in the autumn and during 2012. 

"HMRC had encouraged plumbers and gas fitters to come forward voluntarily under a scheme called the Plumbers Tax Safe Plan (PTSP). HMRC is now getting tough with those who didn't register," says Iain, "but they have confirmed that although the guarantee of PTSP terms is no longer on offer, this disclosure route will remain open for those in the industry who have unpaid tax who want to now come forward. The penalty they will pay will still be lower than it would be if they were contacted by and subject to a HMRC investigation.

"It may also be available to anyone who could be targeted by new investigative teams or campaigns announced for later this year and in 2012 by HMRC, or any other individual or business, who wants to come forward to voluntarily disclose an undeclared tax liability. Businesses and individuals operating at or above VAT threshold who have not registered and could be targeted by HMRC under the new VAT Initiative should disclose separately through that disclosure route and have until 21st December to do so."

Iain says that many tax evaders believe HMRC doesn't have the resources or manpower to investigate everyone within the targeted sectors or trades, but are playing a dangerous game if they intend to "tough it out".

He adds: "There seemed to be a consensus in the plumbing industry that HMRC wouldn't catch everyone. I have heard of some who were going to take their chances on not getting caught. People should not underestimate the amount of data that HMRC is holding, in this sector and others being targeted by their campaigns. Those caught out will be treated seriously, can expect heavy penalties and a few are at risk of criminal charges being brought."

HMRC offered the PTSP as part of a round of amnesties. Previous schemes included doctors and dentists and users of offshore bank accounts. The particularly advantageous Liechtenstein Disclosure Facility is still open.

Disclosure under these HMRC schemes will have typically secured a modest penalty addition of just 10 per cent of the tax underpaid in the past six years. The maximum penalty is usually 100 per cent (in very rare cases it can be 200%). 

Advice on disclosing unpaid tax to HMRC, calculating tax due, reasonable estimates, number of years, the right penalty rate, accurate completion of the HMRC forms or negotiating time-to-pay and/or payment by instalments can be obtained from Iain Macleod by calling 07920 146800 or by emailing him at imacleod@edftax.co.uk.