Tax checks on dentists to be extended

Tax checks on dentists to be extended

HM Revenue and Customs (HMRC) is to extend its tax investigations by delving into the social media activity of dentists.

The tax authority has recently introduced the new Single Compliance Process (SCP) which relates to tax checks on small and medium enterprises (SME), including dentists.

The initiative was created in response to a government edict for HMRC to introduce quicker, more efficient checks which gets results – specifically an increase of £7 billion a year in tax gathering by 2014/15.

Piloted in 16 tax offices in May 2011 and extended by 18 months, SCP is now set to be rolled out across the country.

Under SCP, the tax authority aims to simplify the process by determining the seriousness of a tax case – and the level of effort involved – with a risk and behaviour review ahead of a tax check.

This categorises the level the case is allocated and involves an assessment of the business and the owner.

The review includes:

  • Checking accounts for current and previous years for inconsistencies or inaccuracies;
  • Checking gross profit rate or hourly rate with comparable businesses;
  • Issuing information notices for further data, and
  • Generating a “personal lifestyle profile” on the practice owner, partners and directors, including analysis of social media updates.

The behaviour and risk assessment tries to determine the level of tax evasion and a measure if errors were made “despite reasonable care”, “carelessly”, or “deliberately”.

Once all the information is gathered, tax inspectors will then assign the case to one of four levels. Level One will mean no meeting is required to settle the issue, Level Two may necessitate a meeting in person, Level Three will require a further in-depth review and Level Four will see a detailed investigation into risk and behaviour outcomes due to suspicion of tax evasion.

Businesses and dentists under suspicion will receive letters announcing upcoming tax checks and describing in more detail the information which is being sought, such as business expenses, to hasten the enquiry.

Unlike before, those who attend meetings in person will not be given meeting notes, while there will also be inspections at practices, and principals will have to conform to officers’ requests for information.

It is understood that cases thought to be at “higher risk” will receive unannounced visits and/or other “covert” activities.

Dental practices with spotless records should not have anything to fear from SCP. However, for others, it may be time to check their accounts to ensure they are as up-to-date as possible.

For further information, please contact us.

Posted in Dentists.