The BBC has recently reported that:
Tax officials have harvested £9m in unpaid tax from 1,500 medical professionals, although 30,000 were approached in a disclosure campaign.Pockets of the medical profession are accused of failing to declare payments for consultations, medicals and other fees, backed by details of payments that HMRC has received from sources such as National Health Service trusts, private hospitals and medical insurance companies. So what can we surmise from this development?
Medical professionals have either been unaware of this 'tax amnesty' or have ignored the facility. Or maybe they have been advised to do so by their accountants.
The situation is just as bad, if not worse, for offshore disclosures where the reported takeup is again very low. The first such 'facility' was announced in April 2007. Over 3 years ago. Since then has there been any publicity given to tax fraudsters who failed to play ball? More recently we've had the ODF and the LDF.
Amnesties only work if people think they are seriously at risk of penalty if they fail to comply. Does anyone really believe that HMRC have the resources to pursue more than a small fraction of the remaining medical professionals who have not come forward voluntarily? Or all the holders of offshore accounts? Maybe most of them have nothing to hide and thus nothing to fear? Maybe some of those targeted by the 'amnesties' have simply put their house in order and hope thereby to escape attention in the future.
Do people make a reasoned judgment over the odds of being caught? And of the consequences?
In my view there are 3 possible reasons for the failure of recent tax amnesties:
1- HMRC over-estimating the scale of the problem. Maybe the typical sums unreported by medical professionals are too small per head. Rather than 'fess up' the taxpayers simply get it right going forwards. Maybe much of the interest on the offshore accounts has been properly reported or is legitimately not subject to UK tax.
2- Inadequate PR. Has HMRC relied too heavily on accountants and tax advisers to tell their clients, the majority of whom are already compliant? Where were the radio and tv adverts encouraging people to comply - like the ones that are broadcast re tax credit claimants and benefit fraudsters?
3- Insufficient numbers of HMRC staff. Gordon Brown's disastrous plan to decimate HMRC staff numbers means there is a tide of departing investigation officers. They cannot easily be replaced. Most were experienced, able and fair. Without them many advisers consider HMRC's threats to be empty. Here's the latest - again only in the professional press. Accountancy Age reports a spokesman from HMRC who has issued a "stark ultimatum":
“We’re only 50 yards into a marathon. Those who don’t come forward will face naming and shaming and in the most extreme cases will be prosecuted.We always win in the end.”My inclination is to respond: "If only that were true". What's your view?