HMRC targets solicitors

Solicitors are the latest professionals to come under scrutiny from HMRC with the launch of a new campaign urging solicitors to come forward and bring their tax affairs up to date.

HMRC has obtained relatively good success from other campaigns (see below). The launch of a campaign is instigated because HMRC have researched and evidence the commercial success of such a campaign. HMRC would have gathered enough evidence to show that solicitors are under declaring income. Given the Connect system and information available to HMRC, it is likely they can identify which solicitors are under declaring.

Caroline Addison, head of campaigns for HMRC, 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”. Ms Addison added that solicitors who come forward using this campaign will pay lower penalties. She also said “Those who make a deliberate decision not to pay the taxes due could face a penalty of 100 per cent or more of the tax due, or even a criminal prosecution.” Ending with “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.”

This campaign gives solicitors the opportunity to bring their tax affairs up to date in a manner which is favourable for them. This applies to solicitors who are self employed, work within a partnership or work within a law firm.

If a solicitor chooses to disclose through this campaign they are likely to receive the best possible terms with HMRC. However, if not, HMRC will (eventually) investigate those identified. This could have serious consequences for those solicitors given HMRC view knowledgeable professionals who evade tax as potential candidates for criminal prosecution based on the principle they should have known better. It is therefore important that any solicitor entering the facility ensure they make all material disclosures and handle the process carefully. HMRC and professional bodies indicate that in these situations expert professional advice should be sought.

Solicitors have until 9th March to notify HMRC of tax liabilities and until 9th June to disclose what is owed.

If you have any concerns regarding the above or want further information, please contact Anton Lane (alane@edge-tax.com /03332 074404).

Previous Campaigns

HMRC has had much success with these campaigns in the recent past claiming to have collected nearly £1bn in total. £596 million directly from these initiatives and £338 million from follow-up activities. We have seen various campaigns aimed at different business sectors including: plumbers, electricians, restaurant owners, landlords, doctors and dentists. Below is a table which shows the revenue collected from each campaign:

Campaign Revenue as of December 31st
Tax Health Plan £57,629,542
Tax Catch Up Plan £1,920,273
Value Added Tax Outstanding Returns £24,760,840
VAT Initiative £20,989,925
Plumbers Tax Safe Plan £19,016,856
Electricians Tax Safe Plan £1,636,693
E Marketplaces £5,309,345
Direct Selling £292,404
Tax Returns Initiative £80,784,866
My Tax Return Catch Up £1,421,426
Property Sales £28,666
Offshore Disclosure Facility £509,030,000
Offshore New Disclosure Opportunity £123,530,000
Campaigns Consequential Disclosures £3,689,051
Let Property Campaign £7,852,753
Health Well Being Plan £809,505

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