HMRC has launched a tax amnesty apparently aimed at middle class tax payers who have previously undeclared earnings or underpaid tax. In exchange HMRC will likely waive its harshest penalties, in most cases only requesting the unpaid tax be paid with interest, before wiping the slate clean.
So why is HMRC doing this?
HMRC isn't doing this because it's being nice, the intent is to boost the Treasury's tax receipts by bringing more people into the tax regime, particularly those who have made mistakes or have received poor tax advice in the past. As part of the amnesty the taxman will to draw a line under past misdemeanors and allow those who come forward to start again with a clean slate.
John Whiting, the policy director of the Chartered Institute of Taxation, said: "This is all about encouraging as many people as possible to come into the system, regularise their affairs and get back on the straight and narrow. The overwhelming majority of the workforce pay their taxes on time and in full. This is about clamping down on the minority who don't."
Will HMRC waive all penalties and fines?
No they won't. The taxman is using a carrot and stick approach promising to treat those who come forward more leniently than they might otherwise. While HMRC won't promise that perennial tax avoiders won't be prosecuted and face their stiffest fines, but the most likely outcome is a request to pay back the unpaid a tax plus interest, but again this is not guaranteed.
What the taxman is keen to get across is that this is a case of 'own up or face the consequences' when they eventually catch up with you.
But hasn't HMRC done something like this before?
No not quite like this. Previous amnesties have been aimed at particular groups of taxpayers, such as the the self employed or those selling goods on the Internet. This latest amnesty is aimed at everyone.
What should you do if you want to come clean?
Well the first thing to do is to get your tax affairs in order, which may mean employing the services of a qualified accountant who can also deal with HMRC for you. Alternatively you can visit the HMRC amnesty web page.
Looking for a financial adviser near you?
Do you need financial advice? An independent financial adviser can show you how to make the most
of your money. Find your nearest qualified and regulated adviser using this VouchedFor search tool.
Alternatively, Hargreaves Lansdown, one of the UK’s largest firms providing restricted financial advice, is offering a £200 John Lewis voucher* to new clients.