HMRC targets undeclared consultancy income in the medical sector

HMRC’s latest campaign, which uses information obtained from healthcare providers to identify individuals whose reported income may not match the consultancy fees they received. Importantly, HMRC says that tax agents will not receive copies of the letters, so anyone who uses an adviser should pass the letter on promptly.

HMRC makes clear that this is not yet a formal compliance check. Recipients are asked to review the relevant Self Assessment returns and establish whether all consultancy income has been declared. If everything is correct, HMRC still expects the individual to respond and confirm that there is nothing to disclose.

Where income has been omitted, the next step depends on the age of the return. A return can normally be amended within 12 months of its statutory filing deadline. Where that deadline has passed, HMRC says that a disclosure should instead be made.

Ignoring the letter is risky. HMRC says it will continue monitoring the taxpayer's records and may open a compliance check if no action is taken. Any disclosure of omitted consultancy fees made after receipt of the letter will be treated as prompted, which can affect the level of any inaccuracy penalty. However, acting quickly and providing full information can still reduce the amount of any penalty charged.

Anyone receiving one of these letters should therefore check the figures against their invoices, bank records and submitted tax returns before the 30-day deadline. Even where the income was correctly declared, the letter should not simply be ignored.