Consultants working in the medical sector can expect a letter from HMRC if they have not already received one.
The first batch of letters is not a sign of wrongdoing, but how they are handled could affect whether penalties are inflicted.
It is likely that the focus will expand to other sectors, so knowing how to handle these letters is vital for all consultants.
When an individual conducts consultancy work, they will likely have to report the income through a Self Assessment tax return to ensure that the correct amount of tax and National Insurance Contributions can be paid.
HMRC has become aware of a discrepancy between the amount of consultancy fees paid and the declared income of those consultants.
This has come to light in the medical sector, but there is a reasonable chance that other sectors may have a similar issue.
There is a concern that some consultants may be deliberately underreporting income to pay less tax, while some may simply be submitting erroneous data due to poor record-keeping.
To get to the bottom of the issue, HMRC has issued letters to consultants, asking them to review their Self Assessment tax returns to ensure that everything is up to date and accurate.
It is important to note that the letters do not yet constitute a compliance check.
Despite this, every letter will need some form of response and cannot be ignored.
Accountants and tax advisers are not set to receive copies of the letters, so those seeking expert advice should pass along the letters once they have been received.
If a review of your Self Assessment tax returns reveals no issue, you will only need to respond to HMRC and confirm that there is nothing left to disclose.
If there has been an omission, it might be possible to submit an amended tax return, provided the deadline has not passed.
Tax returns can be amended within 12 months of the statutory filing deadline, which is 31 January following the relevant tax year for Self Assessment tax returns.
If the deadline has passed for making an amendment, HMRC will expect a disclosure to be made.
Being honest about any mistakes can reduce the penalty received, while ignoring the letter or trying to hide errors can lead to more serious consequences.
Once a letter has been received, you will have 30 days in which to respond.
Our expert team can support you in determining whether your Self Assessment tax return was accurate and guide you through the process of amendments should any be necessary.
This situation serves as a clear reminder to all individuals who file through Self Assessment to ensure that income is declared accurately to mitigate the risk of HMRC penalties.
To stay compliant with Self Assessment tax returns and for support with responding to HMRC letters, speak to our team.
