As you may recall, our article published in August included details of the Let Property Campaign which was launched by HM Revenue and Customs (HMRC) nearly four years ago, writes Pearson May partner Nick Oliver FCA FIoD.
The Let Property Campaign is not the only campaign in existence. In the recent past, HMRC have run several campaigns concurrently as part of their continuing drive aimed at encouraging different groups of taxpayers to make voluntary disclosures of previously undisclosed sources of income. 
HMRC increasingly have access to a number of different resources containing information regarding individuals’ sources of income and they are able to use this information to compare to individuals’ tax records to determine whether full disclosure has been made. By taking part in one of the voluntary campaigns individuals can expect to benefit from lower levels of penalties than would otherwise be imposed if HMRC contact you first.
If you have not previously declared all your taxable income, whether mistakenly or deliberately, an HMRC campaign can be a good opportunity to bring your affairs up to date. It is a good idea to seek professional advice if you are considering making use of a campaign and we have the expertise needed to be able to assist you.
In addition to the Let Property Campaign, there are other HMRC campaigns which remain open, including the Second Incomes Campaign and the Credit Card Sales Campaign (also known as the Card Transaction Programme). The Worldwide Disclosure Facility is another campaign which HMRC have in place focused on overseas assets and sources of income. We included details of this in our September article.
Second Incomes Campaign
The Second Incomes Campaign focuses on individuals who are employed and pay tax through PAYE but who also have additional undeclared income from a separate self-employment source. HMRC gives various examples of what they class as a second income for the purposes of this campaign which include consultancy fees e.g. for providing training, organising parties and events, providing services such as taxi driving, hairdressing or fitness training, making and selling craft items and generating profits from buying and selling goods e.g. regular market stalls or car boot sales etc. In addition to this, one increasingly common source of undeclared is from online selling activities where there is an intention to make a profit.
Individuals may mistakenly view sources of income such as those mentioned above as a supplement to employment income, without realising that any profit generated from such activities will usually be taxable and would need to be disclosed to HMRC.
Credit Card Sales Campaign/Card Transaction Programme
This campaign is aimed at individuals or businesses who have undeclared income from credit or debit card sales. The campaign is open to all types of businesses, whether operated as sole traders, partnerships or limited companies.
HMRC have access to details of credit and debit card payments made to UK businesses and traders since the credit/debit card companies hold this information. HMRC will therefore use this information to identify where businesses and traders may not have paid all the tax they owe on their income.
How to notify HMRC
Notification of intention to make a disclosure under one of the above campaigns must initially be made by completing a standard form. HMRC will then issue a Disclosure Reference Number and a disclosure form for completion. The disclosure form must be submitted within a prescribed time limit and must include calculations of the tax, interest and penalties payable.
It is up to the taxpayer to determine the level of penalties that they think should be payable and these are determined by the ‘behavioural’ tests which range from lower levels of penalty if an error or non-disclosure has been made despite taking reasonable care, through to higher penalties if the error or non-disclosure is careless or, in more serious cases, deliberate. The level of penalty will be lower if a voluntary disclosure is made to HMRC before they contact you first. In certain circumstances penalties can also be reduced for cooperating with HMRC as part of the disclosure.
Even if there is not an active HMRC campaign which covers your position, a voluntary disclosure can still be made to HMRC’s Voluntary Disclosure Team. It is however less likely that individuals in this situation will benefit from more favourable penalties which can be offered under a published campaign.
If you think you may need to make use of any of these campaigns, the Let Property Campaign or need to make a voluntary disclosure relating to any other sources of income, then please do not hesitate to contact us for assistance.
The above is for general advice only and no action should be taken without obtaining specific advice.
