HMRC have announced a new campaign aimed at people who are employed but also have income from self-employment which they have not declared.

Like all of the many previous HMRC’s campaigns, the ‘second incomes campaign’ aims to encourage people to come forward and bring their tax affairs up to date. If they do not provide prompt full disclosure, and HMRC catches up with them later, they face heavier penalties and possibly prosecution.

HMRC gives examples of what counts as a second income:

• consultancy fees, eg 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, eg at market stalls or car boot sales

As in most campaigns, there are two stages to making a disclosure:

• notifying HMRC, and then

• making the disclosure and paying the tax plus interest and penalties.

The deal offered is that, if you make full disclosure in the prescribed format (either online or by post) and this is accepted by HMRC, you will benefit from a reduced penalty (possibly 20 per cent rather than 100 per cent) and have the opportunity to negotiate a payment plan if you cannot settle your liability in full. Disclosure under this campaign does not offer immunity from prosecution but complete and unprompted disclosure is acknowledged as an important factor when HMRC are deciding whether to carry out a criminal investigation.

If you need to discuss this or have any issues with your tax affairs please contact Elliott Buss, Senior Tax Manager e.buss@uhy-uk.com 01633 213318.