On 9 April 2014 HMRC published details of their latest campaign to encourage taxpayers to declare and pay unpaid tax on second incomes.
HMRC will expect settlement of any taxes due four months from the date of declaration of untaxed income sources to HMRC.
The types of income highlighted by HMRC include:
- consultancy fees, for example, 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
If you have undeclared income, making use of this disclosure opportunity should reduce any penalties HMRC may charge you. If you don’t make a voluntary declaration, and are discovered by HMRC, then the penalties you will be charged will be much higher.
- If you make a voluntary disclosure penalty rates are 0%, 10% or 20% depending on the circumstances.
- If you don’t make a voluntary disclosure these rates can rise to 100% of the tax underpaid.
- If the non-disclosure involves offshore liabilities the penalties can increase to 200%.