Christmas has come early for tax dodging lawyers as HMRC has announced a new tax amnesty for solicitors this morning, saying:
The Solicitors' Tax Campaign voluntary disclosure opportunity runs from 8 December 2014 to 9 June 2015. It will be of interest to you if you work within the legal profession as a solicitor and you want to bring your tax affairs up to date. For example if you haven't told HM Revenue and Customs (HMRC) about all your past income, gains and undisclosed liabilities.
You may be a solicitor working:
- for yourself in your own business
- within a partnership or limited liability partnership
- within or as a company
This list is not exhaustive.
HMRC believes that its customers want to pay the right amount of tax and wants to help those not paying the correct amount of tax to put that right. This guidance describes what to do if you need to put things right.
Three thoughts. First, if there was one profession where we should expect people to get things right then it is lawyers.
Second, if there was one profession where we should expect no clemency for carelessness or dishonesty then it's lawyers, but penalty rates or as low as 10% are being offered.
Third, if there's one profession where quiet deals to settle past misdemeanours should not be tolerated because publicity about crooked participants is required it is the legal profession, but HMRC put in all their usual caveats on doing so.
I have some sympathy with the campaigns HMRC undertakes to find evaded tax but I doubt I will be alone in having some difficulty with such an arrangement for lawyers.
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I struggle to see how HMRC can justify providing this amnesty to a select group such as solicitors. As you say, if anybody should know their responsibilities to pay tax due, it should be solicitors. They also know that “ignorance is no defence” and they have an obligation to obtain tax advice if they are unsure of their liabilities, as would somebody who is unsure of any other legal position.
HMRC have run similar campaigns on plumbers, electricians, doctors and dentists, e-traders, private tutors and ‘Second Incomes’ among others. They got the idea from NZ and Aus where such campaigns were shown to bring in a lot of tax for comparitively little effort – as has proved the case with the HMRC campaigns.
It’s about being practical and getting money in or standing on principle and not getting money in. This being the real world, I’m in favour of the first approach.
As for solictors being a ‘special case’, I’m not sure that necessarily follows. Just because some solicitors are involved in tax planning that doesn’t mean the whole profession is or even a large proportion. Why should a conveyancing solicitor be expected to know anything about tax? And (DblEntry) what ‘obligation’ is it solicitors are under about getting tax advice that the rest of us aren’t? First I’ve heard of it.
We are ALL supposed to get our taxes right. The idea that a plumber is less likely to know than a solicitor that not declaring all their income is wrong seems pretty fatuous. So you either accept the concept of amnesties and that they can be applied to any and all trades and professions or you are opposed to them completely.
Is there any logic you can’t follow?
Rather than a glib (and meaningless) one line remark, is there anything I said in my post that you’d actually like to argue against?
I don’t waste my time arguing with those who can’t follow a logical argument
we should do the same for more common criminals… go round all the jails and tell all the prisoners ‘admit you did it and apologise and we’ll let you off with a small fine…’. purely for practical purposes you understand… better we know they did it now than forever go on wondering. after all it would but unfair to expect every wrong-un to know about every crime there’s that many these days. we can’t all be angels can we? and so if you accept the concept of amnesties and that they can be applied to any and all trades and professions or you are opposed to them completely…
surely it’s one thing to offer this to plumbers, and entirely something else to offer it to `solicitors` who know perfectly well that they’re bent
HMRC are on my case today for a “debt” of £2444 in tax and NI which according to my accountant I don’t owe. In fact I only earned about £2500 in the last 3 years.
They’re thretenint seizure of goods.
Is this simply harrasment to intimidate me into paying?
It’s likely that the system has failed
Your accountant needs to find out pretty urgently what has failed and if it is failure to submit tax returns, brace yourself for penalties even if you do not owe tax
It’s not harrassment, it’s going through the collection process. If you’ve not paid something HMRC consider due, then unless you can convince them it’s not due, or agree a Time To Pay arrangement, then seizure is the correct legal course for them to take.
Underpayments can sometimes carry forward for quite some time, even when coded out through PAYE. In fact, if they’ve tried to code an underpayment but but you haven’t received enough income to pay it off, they might have decided that they need to collect it directly. But if you can’t pay you could ask them for a Time to Pay arrangement, which could spread the repayment over a year instead of one hit.
If they do talk about penalties for failing to submit tax returns, it may be worth looking at whether you should have been issued with a return in the first place – if not, HMRC can be very good at accepting that the whole thing can be written off as an error.
If they come knocking looking to distrain goods, be aware that they can normally only do so if they are in your premises, and you don’t need to give them access (unless they have court authority). If you say they can’t come in, then all they can usually do is go away and either discuss things further or apply to the courts for that authority.
I’m slightly ashamed to say it, but this cold weather can be a useful tool. A winter or two ago I kept an HMRC agent on a company’s doorstep for a couple of hours while we negotiated a month to pay the back tax, rather than a week. We did get her a hot drink, and she sat in her car for a while when waiting for a call back from the office, but I suspect that had it been a warm July day she might have stayed to argue for a bit longer. I did feel sorry for her, she was only doing her job and it was a bitterly cold day. But we got the tax paid without closing down the company (now thriving), which was a good result.
Please note that as I have no idea about your circumstances this is only generic comment, and should not be taken as proper advice or relied on – there may be an important fact I don’t know that would render it inappropriate to your situation.
Thank you
Useful
The key issue is a simple one: talk to HMRC, now