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HMRC Campaigns ; all you need to know

29th Oct 2015
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Laurence Vogel explains how HMRC chooses its prey when it comes to targeted tax campaigns

The current round of HMRC’s targeted campaigns against tax avoidance dates all the way back to the Offshore Disclosure Facility (ODF) launched in 2007. The campaign targeted taxpayers with unpaid taxes linked to offshore accounts or assets. HMRC’s approach since then has revolved around offering specific targeted campaigns rather than general tax amnesties. HMRC have so far targeted many specific sectors including plumbers, taxpayers with off-shore accounts, restaurants, members of the medical profession, late VAT registration and those selling goods online as a trade or business. These campaigns have focused on targets areas which HMRC have decided pose the greatest risk of tax being evaded.

The HMRC campaigns are broadly based on similar principles that involve three main stages:

1. HMRC identify taxpayers from a specific group who may have outstanding tax liabilities.

2. HMRC offers taxpayers the opportunity to make a voluntary disclosure using a notification form. Historically, the opportunity to come forward had a finite closing date. However, some of the latest campaigns do not currently have a published closing date and HMRC will allow taxpayers to come forward voluntarily throughout the entire time period that the disclosure opportunity remains open. Making a voluntary disclosure under the terms of a campaign offers taxpayers the opportunity to bring their tax affairs up to date whilst at the same time benefiting from the best possible terms.

3. Once a notification has been made to HMRC, the taxpayer has a further time period (usually three to four months) in which to come forward and fully disclose what tax is owed and to make a payment to HMRC.

The Revenue may formally investigate taxpayers that did not come forward under the disclosure facility or who HMRC believes have made an incomplete disclosure.

HMRC use cutting-edge tools such as 'web robot' software to search the internet and find targeted information about specified people and companies. The software helps HMRC to identify previously hidden relationships between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies. Using the software, HMRC can more accurately target taxpayers who have failed to pay the right tax due.

Current disclosure opportunities:

Second Incomes Campaign: The Second Incomes Campaign offers individuals the opportunity to inform HMRC that they have undeclared income from a supplementary income stream. The campaign targets individuals in employment who have an additional untaxed source of income.

HMRC’s guidance lists the following possible examples:

• 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, e.g. regular market stalls and boot sales.

Let Property Campaign: This targets landlords who have undeclared income from residential property lettings. The campaign offers the opportunity for landlords to come clean about any outstanding liabilities. Those that come forward under the terms of the campaign and make an accurate voluntary disclosure are likely to face a maximum penalty of 0%, 10% or 20% depending on the circumstance on top of the tax and interest due. The campaign is open to all individual landlords renting out residential property. That includes landlords with multiple properties and single rentals as well as specialist landlords with student or workforce rentals.

Credit Card Sales Campaign

The Credit Card Sales campaign offers individuals and businesses that accept credit and debit card payments the opportunity to bring their affairs up to date and take advantage of the best possible terms. Any individual or company that accepts credit and debit card payments should be registered with HMRC. This disclosure opportunity offers the chance for individuals and businesses to bring their affairs up to date in a simple, straightforward way and take advantage of the best possible terms. HMRC has details of all credit and debit card payments to UK businesses and will use this information to identify taxpayers who might not have declared all their income.

Making a disclosure

Making a disclosure to HMRC as part of any of the campaigns will allow taxpayers to take advantage of the best possible terms. HMRC has also previously announced that any taxpayer targeted by a previous campaign will not be able to use a subsequent campaign to disclose liabilities. Any individual or business that has deliberately evaded tax should take immediate action to make a pre-emptive voluntary disclosure to HMRC.

• Laurence Vogel is Head of UK Operations at Informanagement

This article is taken from “Accounting Practice” the ICPA quarterly magazine. Dedicated to supporting and promoting the needs of the general practitioner. You can find us at www.icpa.org.uk or email [email protected] or by phone on 0800-074-2896.

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