New tax disclosure opportunity – Tax Catch Up Plan
On 10 October 2011 HM Revenue & Customs (HMRC) announced a new disclosure facility for private tutors and coaches.
The Tax Catch Up Plan (TCUP) is the latest trade-specific opportunity that HMRC has launched. The disclosure opportunities offer favourable treatment to those people who come forward and disclose previous errors or omissions in their tax affairs before HMRC contacts them.
Who is affected by the Tax Catch Up Plan?
The TCUP applies to people who provide private coaching, whether or not they have a teaching qualification, and covers those who teach traditional academic subjects as well as those such as fitness and lifestyle coaches.
Am I at risk?
HMRC has stated that it has various sources of intelligence available to identify people who have received payment for providing teaching and coaching services. Once the disclosure window has closed, HMRC will pursue those individuals about whom it holds information.
Key features of the TCUP
- There will be a reduced penalty for tax arising from undeclared income disclosed under the TCUP
- Mistakes where reasonable care was taken to get the tax right will not attract a penalty
- Mistakes arising from careless behaviour leads to a 10% penalty
- Deliberate understatement of the tax due may lead to a 20% penalty
- Where reasonable care has been taken, two tax years will be included in the disclosure (2008/09 and 2009/10) and you will need to ensure that your tax affairs are up to date for the 2010/11 and 2011/12 tax years
- Where there has been a careless error, four tax years will be included in the disclosure (2006/07 to 2009/10) and you will need to ensure that your tax affairs are up to date for the 2010/11 and 2011/12 tax years
- Where there has been a deliberate error up to twenty tax years will be included in the disclosure • There may be the opportunity to negotiate payment terms of any liability with HMRC
Key Dates
- A notification to disclose must be submitted to HMRC by 6 January 2012
- The full disclosure and payment must be submitted to HMRC by 31 March 2012
How can Grant Thornton help?
Although promoted as a straight forward process by HMRC, the detailed guidance makes it clear that many taxpayers will fall into the deliberate category that results in an extended disclosure period and higher penalties. It is therefore vital that taxpayers are advised appropriately in respect of any disclosure they consider might be necessary from the outset. Grant Thornton’s National Tax Investigation team are tax enquiry and disclosure specialists. The award winning team have extensive experience of disclosure facilities such as the TCUP and have the specialist knowledge required to ensure that clients are advised correctly and are able to take full advantages of the opportunities available.
A member of our team would be very happy to have an initial, free, no obligation, discussion about any concerns you may have.