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HM Revenue & Customs launch “Second Incomes Campaign”

The News and Updates section in HM Revenue & Customs’ (HMRC) website has just introduced their “Second Incomes Campaign”.  This is to give people a chance to bring their tax affairs up to date, if they are employed and have additional income that’s not taxed.  The detail tells us it’s aimed specifically at undeclared income from self-employment, listing as examples:-

  • Consultancy fees, e.g. for providing training
  • Organising parties and events
  • Providing services like taxi driving, hairdressing or fitness training
  • Making and selling craft items
  • Buying and selling goods, e.g. at market stalls or car boot sales.

However, the system goes on to give people the opportunity to disclose other sources, including Capital Gains.

The Campaign seems in part to be genuinely aimed at helping people to recognise that such source of income are taxable, and should be disclosed.  Taking advantage of present trends, HMRC have included a simple video on YouTube giving advice on circumstances in which notification may be needed:

https://www.youtube.com/watch?v=oElhdGK9gBI&feature=youtu.be

Anyone wanting to take advantage of the Campaign is invited to complete a specific form, and pay what they owe within 4 months of receiving HMRC’s acknowledgement.

Those who make a voluntary disclose will get the “best possible terms”.  The notice adds that if you don’t make a voluntary disclosure and HMRC finds out later that you owe tax, you could get higher penalties or face criminal prosecution.

HMRC’s notes don’t tell us what measure of penalty will be charged for those notifying them of additional income under this initiative.  However, we have completed one of the application forms (on behalf of that well-known miscreant, Mr A Nonymous), and find that the majority will be invited to self-assess a penalty of 10% or 20%, according to circumstances.  Interest will also be charged, along with the unpaid tax.

For those hoping for special treatment under the Campaign, sadly that doesn’t seem to be the intention.  Those rates of penalty are broadly consistent with the level already charged in cases of voluntary disclosure.  That said, they are certainly better than the penalties which will be charged if the taxman finds out about the income before you tell him!

If you have not given HMRC the full facts about a source of income or gains, and would like experienced professional advice on your options, please contact our Kathy Smith on 01908 674484.

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