Private tutors face tax crackdown(Image: Gareth Fuller - PA Wire)

Private tutors are the latest group to be targeted by HM Revenue and Customs (HMRC) as part of its tax evasion crackdown.

The taxman has launched the Tax Catch Up Plan (TCP) to target anyone who provides tuition, instruction or coaching. That includes the traditional academic subjects, as well as fitness, dance, art and musical instrument tuition.

It gives people until 31 March 2012 to come forward and tell HMRC about any outstanding tax due up to 5 April 2010, and to pay any money they owe.

If you take advantage of the TCP and tell HMRC about any income you have not previously declared, you may be eligible for reduced penalties of between 10% and 20% of the amount of tax you owe.

Usually, when the tax authority finds undeclared income, it means heavy penalties - anything from 30% to 100% of the tax owed - and possibly even criminal prosecution.

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Don't miss the deadline
Those covered by the TCP have until 6 January 2012 to notify HMRC that they plan to make a voluntary disclosure of unpaid tax.

Gary Ashford of the Chartered Institute of Taxation said anyone who is worried that they have been underpaying tax - whether deliberately or in error - should get professional advice without delay.

"Even if they are not covered by a disclosure opportunity, penalties will generally be less severe for taxpayers who come forward voluntarily to put their affairs in order with HMRC," said Ashford.

Detailed information:

  • All declarations must be completed and taxes paid by 31 March 2012, unless a 'time to pay' arrangement has been agreed with HMRC
  • The standard penalty during the disclosure period ranges between zero and 20% of the unpaid tax, dependent upon individual circumstances
  • The TCP closes on 31 March 2012. Individuals subsequently found to have undeclared earnings will be subject to fines between 30% and 100% of the unpaid tax, and possible criminal prosecution

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HMRC tracking down tax evaders
The tax authority says that, after the 6 January deadline, it will use data from an extensive range of sources to identify those who have failed to come forward and notify their intent to make a full declaration.

"HMRC uses advanced IT tools such as 'web robot' software, which helps identify people who have failed to pay the right tax," it said in a release. "Those identified face substantial penalties or even criminal prosecution. When this leads to prosecution, HMRC will seek the maximum publicity to discourage others from failing to pay the right tax on time."

HMRC went on to say it is using legal powers to obtain information about payments made to tutors and coaches from various sources, including the academic, sport and leisure sectors, among others.

According to Guy Smith, senior tax consultant at Abbey Tax Protection, the taxman has been writing to colleges to obtain information about private tutors they have used, and will fine any college that fails to comply with its demands.

If you believe you need to contact HMRC under the Tax Catch Up Plan (TCP) and would like professional assistance call TWD Accountants on 0800 093 9433.

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