There is no need to panic, if you are doing the right thing and paying tax on all of your income. PHEW! However if you are not declaring any
income you are receiving you need to declare it before they catch you. The Second Incomes Campaign aims to encourage people to come forward and bring their tax affairs up to date. If any tax affairs are not disclosed with the HMRC, you could face a heavy penalty and possibly prosecution.
Many employees with a second income will already pay tax on it via self assessment or their PAYE codes. This is aimed at those who have such taxable income but have not declared it to HMRC.
HMRC gives examples of what counts as a second income:
- Consultancy fees, e.g. for providing training
- Organising parties and events
- Providing services like taxi driving, hairdressing or fitness training
- Making and selling craft items
- Buying and selling goods, e.g. at market stalls or car boot sales
- As in most campaigns, there are two stages to making a disclosure:
- Notifying HMRC, and thenmaking the disclosure and paying the tax plus interest and penalties.
In this campaign there are no fixed deadlines by which everyone must notify and then disclose. Instead, the opportunity will be open for some time, and the deadline is that you must disclose and pay within four months of receiving HMRC’s acknowledgement of your notification. HMRC will allow more time to pay in suitable cases.
The number of years for which disclosure is needed will depend on how the tax came to be underpaid. For those who have taken reasonable care, it is four years (or from when the error arose if later); for those who have been careless, up to six years; and for deliberate behaviour (in effect, fraud), up to 20 years.
For more information on the issues raised in this article please contact a member of the a&c Team today! Make sure your tax affaris are up to date and in order, before you have to pay the price!
Tel:0161 962 1855 Email: chloe @ac-accounts.co.uk