Taxman amnesty, or crackdown in disguise?

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tax returnTim Ireland/PA Archive/Press Association Images

HM Revenue and Customs has announced what it is calling a 'partial amnesty' for taxpayers who owe money from years stretching back beyond 2010. Anyone who earned money before 2010 that they haven't declared or paid tax on will have three months to do so, during which time they will receive massively reduced fines and penalties.

So is the taxman finally becoming approachable and understanding?

No

Sadly this isn't a glimpse of the softer side of the taxman, as he turns over a new leaf to help those scuppered by the economic downturn. Instead this is actually a warning in disguise.

The announcement was that those who come forward and declare this income before 2 October will have to pay all the tax they owe, plus a penalty of £200 and a further penalty of 10% of all the tax they haven't paid.


This is a vast improvement from the normal situation, where in addition to the unpaid tax they could pay a fine of up to £1,000, plus another penalty of up to 100% of the unpaid tax.
HMRC said: "By taking part in the campaign, people will receive the best terms on offer and HMRC expects that most will not have to pay this penalty. It is always better to come to HMRC before they come to you."

Next steps

However, this is just the first step. It is writing to everyone it feels owes money. These are the people it thinks should have paid 40% or 50% tax but who failed to respond when called on to complete a tax return for 2009-10 or earlier. Many of them tried to disappear, and there are thought to be more than ten thousand hiding from their financial past.

Those who choose not to come forward will then find themselves the subject of a new crackdown on unpaid tax. The taxman will investigate cases aggressively, and pursue conviction.

For those who need to take part in this scheme, the first step is to notify HMRC, then complete a tax return, and then pay the bill. All of this should be done before 2 October, although HMRC said: "If you cannot afford to pay what you owe all at, once don't worry. If your circumstances warrant it, you will be able to spread the payments." Help is available from HMRC by calling a dedicated helpline on 0845 601 8818.

Marian Wilson, head of HMRC Campaigns, said: "The campaign provides a three-month opportunity for those who want to get their tax affairs up to date to come forward. Our aim is to make it easy for them to contact us and send in completed tax returns, putting their affairs in order. Penalties will be higher if we come and find people after the opportunity and some could face a criminal investigation. I urge people to come forward and disclose unpaid tax voluntarily".

This is no hollow threat either. Campaigns launched so far have yielded nearly £510 million from voluntary disclosures, and over £120 million from non-compliance follow-up from a large number of civil interventions, including over 18,000 completed investigations. There are also 23 criminal cases underway, and one man, a plumber, was recently sentenced to jail.

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