On the 9th April 2014 HMRC launched the Second Income Campaign….
A second income could come from:
- consultancy fees, eg 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, eg at market stalls or car boot sales
You need to tell HM Revenue and Customs (HMRC) if your additional income hasn’t been taxed through either:
- your main job
- another Pay As You Earn (PAYE) scheme
- Self Assessment
This is called a ‘voluntary disclosure’. To get the best possible terms you need to tell HMRC that you want to take part in the campaign.
You’ll have 4 months to calculate and pay what you owe.
You can find out about the campaign and how to make a disclosure here
The criteria used to assess if an activity is a hobby or a business are:
- The size and commerciality of the activity.
- The frequency of the activity and transactions
- The application of business principles.
- Whether there is a genuine profit motive.
- The amount of time devoted to the activities.
- The existence of arm’s-length customers (as opposed to just selling your wares to family and friends).
If you have a Second Income its better to disclose it now rather than wait till HMRC find you.
HMRC launched the ‘Let Property Campaign‘ on the 10th December 2013.
If you’re a landlord who has undisclosed income you must tell HMRC about any unpaid tax now. You will then have 3 months to calculate and pay what you owe.
The Let Property Campaign is an opportunity open to all residential property landlords with undisclosed taxes. This includes:
- those that have multiple properties
- landlords with single rentals
- specialist landlords with student or workforce rentals
- holiday lettings
- anyone renting out a room in their main home for more than £4,250 per year, or £2,125 if the property was let jointly, but has not told HMRC about this income
- those who live abroad or intend to live abroad for more than 6 months and rent out a property in the UK as you may still be liable to UK taxes
According to the Telegraph….
Fewer than 500,000 taxpayers are registered with HMRC as owning properties other than their home. And yet other sources put the number of Britain’s growing army of landlords at between 1.2million and 1.4million.
Why the discrepancy? No one can say for sure, but the taxman has his answer: not enough people are declaring – and paying tax on – their property incomes and gains.
HMRC will identify those who they believe should have made a disclosure by:
- comparing the information already in their possession with customers’ UK tax histories
- continuing to use their powers to obtain further detailed information about payments made to and from landlords
Where additional taxes are due HMRC will usually charge higher penalties than those available under the Let Property Campaign. The penalties could be up to 100% of the unpaid liabilities, or up to 200% for offshore related income.
If you owe tax, you must tell HMRC of your intention to make a disclosure. You need to do this as soon as you become aware that you owe tax on your letting income.
At this stage, you only need to tell HMRC that you will be making a disclosure.
You do not need to provide any details of the undisclosed income or the tax you believe you owe.
It sounds like HMRC could be in for bumper Christmas if landlords take advantage of this opportunity to pay up!
Its a popular theme. Earlier this week Danny Alexander said to the wealthy ‘we are coming to get you’.
When it comes to tax dodgers and moving money and assets overseas he may have a point but what about mansion tax covered in the same speach. Is a tax on property the way to go?
France now want their top earners to pay 75% tax!!
But will this just lead to businesses and individuals moving to lower tax countries?
Will the UK be a winner, the UK Government want us to have the lowest corporation tax rate in Europe and we are moving towards a main rate of 20%.
HM Revenue & Customs’ (HMRC’s) campaigns provide opportunities for people to voluntarily put their tax affairs in order. They do this by identifying a group to target and gathering information and intelligence that can be used to encourage and influence that group to come forward. Once a campaign closes, HMRC then uses that same information and intelligence to follow up with action that can include criminal investigations, aimed at those who choose not to pay what they owe.
As a result of a recent campaign a Plumber in Ringwood, Hampshire was sentenced to 4 years in prison, follow this link to read the full story
Accountingweb have been tracking the campaigns, so far 77,616 checks have been carried out and £36.3m tax recovered
So which campaigns are coming up in the next few months:
- Direct Selling – aimed at those selling products to customers away from retail premises, this includes selling door to door, at parties or to friends and relatives. Sellers are sometimes called ‘Agents’.
- Missing Tax Returns – aimed at Individuals who have been requested to provide or should be submitting Self Assessment Returns but haven’t http://www.hmrc.gov.uk/sa/need-tax-return.htm (Company Directors are required to submit returns)
- Trade Campaigns – aimed at those working in the Home Improvement, Maintenance and Repair sectors
- e Marketplaces – aimed at those who sell on line (such as online auctions) and don’t disclose their income http://www.hmrc.gov.uk/campaigns/emarket.htm
If you are in one of these target groups, now is time to makesure your tax affairs are in order.