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EnergyTaxman amnesty, or crackdown in disguise?
Filed under: Tax
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Tim Ireland/PA Archive/Press Association Images
So is the taxman finally becoming approachable and understanding?
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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.
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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.
Five biggest taxpayer stings
- 1. HMRC vs Vodafone<p> Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.</p>
- 2. HMRC vs Goldman Sachs<p> The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC <em>did</em> claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.</p>
- 3. Taxpayer vs Carlyle Group - QinetiQ<p> Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.</p>
- 4. Taxpayer vs NHS Management<p> The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.</p> <p> <br /> "BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.</p>
- 5. Taxpayer vs public sector productivity<p> Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.</p> <p> Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.</p>
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