Saturday, 16 January 2010

HMRC tackles the medical profession with the Tax Health Plan

We professionals in the tax business are fond of offering tax health checks to prospective clients, but now we should be offering health checks to medical professionals, who are the target of HMRC's latest campaign to collect tax from perceived miscreants. I am sure the Revenue is not suggesting that all in the health business are into dodgy dealing and falsifying their tax returns, but presumably there must be a supposition that “extras” such as giving references to patients, signing passport applications and getting payments from pharmaceutical companies slip through into doctors' pockets unnoticed by their accountants or tax advisers. Those targeted who have something to report must notify their intention to do so by 31st March 2010 and have until 30th June 2010 to have made the disclosure and arranged to pay any tax that is due.

Given that we have had two opportunities for people to disclose their offshore bank accounts and we have the ongoing Liechtenstein Disclosure Facility, the HMRC tactic is simply to concentrate the minds of a particular group of taxpayers. I doubt that doctors are any worse or any better than many other trades or professions. I assume this must be the first of many initiatives targeting various sections of the business community.

Who will be next on the list? Pharmacists? Tyre fitters? Plumbers? Wheel-tappers and shunters? Accountants and allied professions? It is a novel idea to put each sector under the microscope, but it will take an awfully long time to get through the list. I hope HMRC gets some tax dodgers to confess, but doubt the tax take will be significant from each campaign, especially given the disappointing response to the recently closed second campaign on offshore accounts.

© Jon Stow 2010

Details of the HMRC Tax Health Plan

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Tuesday, 12 January 2010

A tax practitioner's view of the economy - why we have reason to be worried

Dealing as I do with the nitty-gritty results of small business owners' efforts, I am puzzled by some of the predictions for the economic recovery and in relation to the recent short term sales figures of certain more successful stores, notably John Lewis, Marks and Spencer, and House of Fraser.
My perception is that service businesses have had a very poor year, and it is perhaps poorer in 2009-10 than for the 2008-09 period to March last year.
I believe there is a huge gap between the self-employed (and I include micro businesses operating through companies) and those still in employment, living on at least the same salary or wage that they have had previously. The latter group has benefited from slight deflation and the desperation of the stores to shift goods at smaller margins, but I believe principally because the crash in interest rates has given employees with mortgages extra cash to spend. I remember from childhood the game we used to play, calling out "I am on Tom Tiddler's ground". Those still waged or salaried with lower household costs are spending what used to be the mortgage money at the sales, rather than saving it for a rainy day as many of us might think they should. They are in the privileged if uncertain position of Tom Tiddler's ground. Saving is bound to be rather discouraged also because of the lower interest rates, but people have forgotten how to be prudent and save.
I worry that the whole effect of a 0.5% bank rate is to distort the true economy (understandably in many ways) but means that many more chickens are likely to come home to roost as small business struggles along, the jobs market contracts on some of the current big spenders, and the tax hikes bite after the election. The latter will come, no matter who is in Government. Thus the double-dip graph of the nation's economic forecast - a "W" - seems the most likely scenario with little sustained improvement for two or three years.
That is how it seems on the ground as a small business owner looking after other small business owners, and I wish it were different.
© Jon Stow 2010
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Business, Small business, House of Fraser, Employment, John Lewis, Money, Economy, Marks & Spencer, interest rates, double-dip, taxation, hike, tax increase