Insights

If you are running a business and you accept debit and credit card payments, but for some reason have not included these sales in your tax return, you should be aware that HMRC have announced a voluntary disclosure campaign offering an opportunity to correct previous tax liabilities. Most campaigns are launched with a fixed time period but unusually; the Credit Card Sales Campaign is open ended for the time being.

What are the key features of the Credit Card Sales disclosure campaign?

If you wish to use the Credit Card Sales disclosure facility, the following features apply:

• The taxpayer needs to tell HMRC they intend to use the disclosure opportunity;
• HMRC will provide a unique disclosure reference number;
• The taxpayer is given four months to calculate and pay all tax due, together with penalties and interest;
• Taxpayers facing difficulties making payments can negotiate a payment plan with HMRC to pay arrears in agreed instalments;
• Depending on why the income was undeclared, historical calculations may be required going back 20 years. More typically, a taxpayer will be required to re-examine sales records for the past four or six years;
• The onus is on the taxpayer to decide how far back they need to go in reviewing sales records and calculating tax arrears;
• Penalties will be calculated based on individual circumstances but will be lower than if the taxpayer chooses not to take advantage of the Credit Card Sales Campaign.

HMRC’s voluntary disclosure campaigns are opportunities for those with undeclared taxable income or gains to come forward and bring their affairs up to date. If taxpayers choose not to use the opportunity created to make a voluntary disclosure and HMRC catches up with them later, they will incur greater penalties and potentially also face criminal prosecution.

HMRC have issued guidance explaining how to use the Credit Card Sales campaign, find out more here.

Other campaigns HMRC is running that we have recently highlighted include the Second Incomes Campaign and the Let Property Campaign. Read our previous blog for more information about these opportunities.

As is always the case, if you believe you may have underpaid taxes and wish to take advantage of one of HMRC’s disclosure facilities, seek professional advice first. It is important to fully understand the implications of making a disclosure before contacting HMRC directly. For more information or advice on dealing with HMRC enquiries and disclosure opportunities, contact Anne Eager by emailing ae@rjp.co.uk.