As part of HMRC’s ‘amnesty’ towards people who have undisclosed income from earlier years, they have launched a further campaign to encourage these individuals to disclose such income with favourable penalty rates, generally a maximum of 20% of the tax due, for coming forward voluntarily.
The new campaign is called ‘Second Income Campaign’ and is aimed mainly at employed persons who have other sources of income and should have filed a Self Assessment Tax Return to disclose this.
HMRC has provided examples of the sources of income they expect to be disclosed:-
- fees from consultancy or other services such as public speaking or providing training
- payment for organising parties and events or providing entertainment
- income from activities such as taxi driving, hairdressing, providing fitness training or landscape gardening
- profits from spare time activities such as making and selling craft items
- profits from buying and selling goods, for example regular market stalls, boot sales etc.
This is by no means exhaustive and anyone with undeclared secondary income will be affected. Those who have missed previous campaigns which concentrated on more specific areas of secondary income i.e. ebay sellers, alternative therapists etc, can still use this facility.
Unlike previous campaigns, this one has no specified end date at the present time, however once registered, there is a four month deadline to make a full disclosure.
Tax Manager Peter Way-Rider of Ellis & Co Chartered Accountants and Business Advisers in Northgate Street, Chester, said: “We would urge anyone who thinks they might have secondary income to declare to come in and have a chat with me so I can advise them of what their next steps should be. Remember we offer a one hour’s free consultation to new clients and you can book your appointment online by visiting the contact us section of our website www.ellis-uk.com”
Other HMRC Campaigns and disclosure opportunities
The other campaign still running is the ‘Let Property Campaign’.
HMRC is witnessing an increasing number of enquiries into people who have undeclared letting income. Any person who needs to make a disclosure should do so without delay to avoid increased penalties should HMRC make enquiries first.
So far, according to HMRC figures released on 31 December 2013, they have recovered over £850m in tax from previous campaigns, not including tax paid under the Liechtenstein Disclosure Facility (LDF) and from the regularisation charge under the UK/Swiss Tax Agreement.
The LDF still has another two years left to run, however HMRC has already been sending out notifications to taxpayers that they are aware of assets held in Switzerland and asking these taxpayers to return a certificate to confirm if :-
- No disclosure to make
- A disclosure will be made via the LDF
- A disclosure will be made, but outside of the LDF
We have seen cases where HMRC has obtained information about Swiss assets, despite the taxpayer concerned not authorising their bank to disclose their account information to HMRC and electing to pay the regularisation charge instead. If a letter is received from HMRC where this applies, it still should not be ignored.
The Isle of Man and Channel Island disclosure facilities are still running and again it is imperative that anyone who needs to make a disclosure of income from funds held in these jurisdictions should do so soon. Penalties of up to 200% are chargeable on the tax due from offshore investments where a person does not make a voluntary disclosure.