Insights

HMRC is currently running a card transaction amnesty programme for retailers and e-commerce merchants that accept card payments. This gives any business that may not have accurately reflected all the transactions processed in their VAT returns an opportunity to rectify the situation and correct their accounts, at the same time minimising any penalties they might incur.

This amnesty is a final warning for all retailers that have not fully disclosed their revenues. HMRC have made it known that they have transaction data from the card payment companies verifying all payments accepted and can prove whether sales have not been declared for tax purposes. Once the amnesty period has ceased, HMRC has warned that its inspectors will be undertaking unannounced visits on all different kinds of retailers, including internet traders and in fact, this has already started.

If you are a retailer or e-commerce trader and think you may have undeclared income, it is important to understand the implications of this and how the card transaction programme might be used to your advantage when declaring a VAT (or other tax) shortfall.

Any business that uses the scheme should be prepared to calculate and pay any self assessment, VAT, capital gains tax or other duties or tax payments that are outstanding within 90 days of making a declaration. In return, they will be offered reduced penalties. This will be calculated by HMRC taking into account the severity of the situation balanced against the fact that the business has come forward voluntarily to resolve the issues.

HMRC has said that if a business can be regarded as having taken ‘reasonable care’ over their tax returns and registered appropriately for self assessment but underpaid their taxes, they will be required to repay the outstanding amounts for up to 4 years. If the business is deemed careless, they will be required to pay the amount due for 6 years and if the mistakes were deemed deliberate, the penalty timeframe extends to a maximum of 20 years.

If you think you have undeclared revenues and wish to take advantage of the card transaction amnesty, it is advisable to discuss this with a VAT specialist before approaching HMRC.

For help and advice on all aspects of VAT compliance, please contact partners@rjp.co.uk.