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The Provincial Tax Practitioner provides his own perspective on HMRC's 'Plumbers' Tax Safe Plan'. 

Introduction

A number of plumber clients have rung us to express their views on the Plumbers’ Tax Safe Persecution - sorry, slip of the keyboard - I mean of course, Tax Safe Plan written warnings that HMRC has been lobbing through their letterboxes. The general opinion expressed by them all can be summed up by taking a collection of words all too familiar to them – load of old ballcocks - and re-arranging it into another well-known phrase or saying.

I know I’m at odds with the opinion of the esteemed Managing Editor of TaxationWeb, in finding HMRC’s approach to this particular sector of the self employed bordering on discriminatory. I wholeheartedly agree with the government’s commitment to tackle tax evasion but why pick on plumbers as a starting point? Why not single out taxi drivers, builders or nightclub owners?

Detective: You know why we’ve pulled you in don’t you?

Plumber: Is it cos’ I is a plumber?

Detective: I can assure you young lad that the Met is a discrimination-free zone. But now you mention it, you do reek a bit of putty and flux….

Plumber: Occupational hazard I’m afraid.

Detective: … and your eyes are a bit close together.

Stories of Plumbers’ Earnings have been Greatly Exaggerated.

It seems the hard-working plumber has suffered a pretty bad press over the past few years, particularly during the building boom between 2002 and 2007. They were perceived as charging exorbitant amounts of money for the work they undertook and appeared so well remunerated that every man and his dog aspired to roam the land with a sink plunger and a blow torch. In 2004, hundreds of people camped out to re-train as plumbers at Leeds College of Building; 400 applications were received for 36 available places. College staff gave out leaflets warning that stories about plumbers’ inflated salaries – of up to £80,000 a year - had been greatly exaggerated. The leaflets said most plumbers earned between £18,000 and £30,000 which, from my experience of the plumber clients we have, is an accurate assessment.

‘Come Out with your Hands Up; We’ve got you Surrounded’

We’ve all seen films where a gang of AK47-wielding robbers is holed up in a bank with one of ‘Blunkett’s bobbies’ standing outside with a ragman’s trumpet and a Yorkshire terrier. A desperate attempt to force the immediate surrender of the ‘baddies’ is made using the cunning subterfuge of an apparent overwhelming weight of numbers and weaponry.

It seems to me that HMRC’s lack of resources is forcing them into this ‘come-out-with-your-hands-up-we’ve-got-you-surrounded’ scenario. 

For a Fugitive Plumber, How Safe is Gas Safe?

You would have to be a pretty stupid plumber to be on the Gas Safe Register – the replacement for CORGI registration - and undertake work which is not declared to HMRC. I doubt that the tax yield from a small band of stupid plumbers is going to justify the existence of this perceived amnesty for dishonest plumbers.

It may be however, that HMRC will seek to liaise with Gas Safe’s investigations teams, who are dedicated to rooting out illegal, unregistered plumbers. 

The Truly Artful, (Tax) Dodger

There must be a significant number of dodgy tradesmen undertaking plumbing work with no intention of declaring this source of income. These tax cheats deal in cash, both in terms of payment received and purchase of materials. I doubt whether such hard-nosed individuals are going to come out with their hands up. I rather think their attitude is ‘catch me if you can, and if you do - and only find 50% of what I’ve managed to fiddle – then I’m still quids in.’

I really do hope that HMRC has the manpower and intelligence to root out these tax evaders, because they take the bread from the mouths of honest, hard-working plumbers.

1 June 2011: The Beginning of the Open Season on Plumbers

I also hope that the expiry of the 31 May notification date doesn’t simply mean that HMRC has now got carte blanche to enquire into thousands of plumbers' tax returns.

I remember the last time I had an enquiry into a plumber’s tax return. It was several years ago and the case was handed to a trainee who tried to tie in every tap, length of pipe and connector to each sales invoice: one small step for a plumber but one giant leap for an HMRC non-plumber. The enquiry dragged on for months, until my brain was on the point of atrophy.  I eventually grew weary of the sheer pointlessness of it all and had it closed down. The client received a tax refund.

To Boldly Go Where No Non-Plumber has Gone Before

I have advised a non-plumber, more removed from plumbing than Greece is from fiscal prudence, to avail himself of the PTSP scheme. This client isn’t a tax cheat or serial evader but someone whose hobby has grown into a business over a period of four years. Ostrich-like, he has simply thrust his head in the sand, and the more time passed the more fearful he became of the consequences of notifying HMRC. So the scheme provided a timely opportunity to ‘get back on track'.

The more I delved into the minutiae of the PTSP guide, the more I came to realise that this was a DIY enquiry, disclosure, offer and settlement all in one: quite a difficult feat for a plumber who presumably, because he is using the scheme, is not particularly adept at arriving at and disclosing accurate figures. It’s a bit like the NHS trying to save money and resources by launching a layman’s DIY method for a common but tricky surgical procedure, with any slip-ups resulting in a vocal range enjoyed only by the Bee Gees.  

NHS Call Centre operator: Don’t worry sir, I can talk you through it. Have you downloaded our Vasectomy Safe notes?

Nervous caller: It looks a bit complicated…

NHS Call Centre operator: Which bit don’t you understand?

Nervous caller: Vas deferens: I thought he played for Chelsea.

The Facts, But Not Necessarily All the Facts

I fully understand that HMRC wants to make the process painless and simple, and offer the wayward plumber an easy, professional-fee-free alternative to resolving his problems. However, I feel they really should give the poor plumber all the facts pertinent to his arriving at not just a net trading profit, but a taxable profit figure.

Capital Allowances: I can find no mention of our tax cheat being advised he can claim these valuable allowances. Given that a plumber probably has a considerable sum invested in a van and tools and equipment, might not it have deserved a mention? But there again, HMRC does warn that tax is a complicated business…

Back to Our NHS Call Centre:

NHS call centre operator: I know it’s not in the detailed notes sir, but it’s only a minor oversight.
Nervous caller: (sounding like Barry Gibb) I think it was worth mentioning that this procedure could have been made far more tolerable by drinking half a bottle of brandy and biting hard on a leather brogue.

Not Worthy of a DRN

I am also starting to wonder whether my client’s lack of experience in the plumbing department to the tune of zero has thrown a (plumber’s) spanner in the works, because neither I nor the client has received a DRN (Disclosure Reference Number.)

From what I can gather, being a non-plumber, he has been shipped out to a non-plumbing department on a sandbar somewhere off the coast of Norfolk, and not a peep has been heard from this mysterious centre in over eight weeks: perhaps the tide’s in.

I gather that a DRN won’t be issued because my client isn’t a plumber.

So discrimination continues when you’ve taken advantage of the PTSP: if you’re not a plumber you’re just not worth a DRN.

It could replace the phrase ‘you’re not worth the candle’ as a measure of worthlessness, as in: a Portuguese promissory note just isn’t worth the DRN.

I am waiting with baited breath for the Vicar’s Tax Safe Plan to be announced and I am hoping a lapdancer turns up in the office to make a complete disclosure: of past earnings of course.

I expect HMRC will make a thong and dance about that.

Note:

I am indebted to James Sykes for pointing out the grammatical faux pas in my previous article (Dick Turpin Rides Againl).

I have decided to use the very reasonably-priced services of an A level English student to proof read future articles and here is my suitably proof-read apology;

‘Dear Mr Sykes, I shall be chekking all of the Provinshul Praktishoners work in future and u can rest ashured that you will not find any more misteaks. You must no that accountants kant write English as well good as some 1 like me’.