Doctors are being warned to keep their tax affairs in first class working order as HM Revenue & Customs (HMRC) tightens its grip on the medical profession. Delegates at the annual conference of the Association of Independent Specialist Medical Accountants (AISMA) heard Bob Trunchion, tax principal at MacIntyre Hudson and member of the firm’s Healthcare sector group, outline the latest in a series of measures taken by HMRC that will pile the pressure on doctors.
These include a stringent late filing penalty regime, introduced in April this year. Replacing the standard one-off £100 penalty for late filing of self-assessment tax returns, a staged system introduces fines that mount up the longer the length of delay. Doctors sending their tax return one day late will pay £100 and then £10 a day up to a maximum of £900 for the first three months. Delays of six months mean doctors paying a further £300 or 5% of the tax due, which could be a considerably higher sum for doctors, and another £300 or 5% of tax due for 12 month delays. These penalties for late filing are in addition to the surcharges for late payment of tax and the penalties for errors in tax returns which can amount to 100% of the tax due in cases of deliberate understatement and concealment.
Bob Trunchion said: “HMRC put the medical profession under the spotlight last year with the introduction of the Tax Health Plan, which was an attempt to identify doctors who are deliberately avoiding tax. It has signalled its intention to keep a close eye on consultants and specialists who are increasingly likely to face enquiries and investigations.” Mr Trunchion said that if doctors do not have the evidence to support income and expenses, HMRC is likely to come down extremely hard.
Delegates at the AISMA conference heard Mr Trunchion describe different examples of how doctors could fall foul of HMRC rules, including the area of continuing professional development (CPD). While CPD fees would normally be considered an allowable expense, if the CPD led to an additional qualification it could be described as ‘betterment’ allowing the doctor the potential to earn more in the future. Consequently this could not be deemed an allowable expense. This was just one of several areas where doctors need to take care, said Mr Trunchion.
Luke Bennett, AISMA committee member and partner at accountancy firm Winter Rule, said: “Tax returns that include inaccuracies, through careless mistake or deliberate error, will incur substantial penalties that could be as much as 100% of the potential lost revenue. Doctors are facing unprecedented pressure from HMRC and should turn to a competent specialist medical accountant to help them keep their affairs in order.”