HM Revenue and Customs (HMRC) is launching its Second Incomes Campaign, designed to target those who freelance on top of their normal job but, as yet, have failed to declare their self-employed income.
The scheme is similar to HMRC’s many other voluntary disclosure initiatives in that it promises lighter penalties for those who come forward, but this particular campaign is unique as it is without fixed deadlines.
Subsequently, employees must come forward to HMRC to declare their self-employed income and pay the tax owed within four months of receiving HMRC’s acknowledgement of their notification to be in with a chance of settling up on the best possible terms.
HMRC’s highest penalties are reserved for those the tax authority approaches themselves.
The accuracy of information provided by the taxpayer of their second income will also be taken into account by HMRC, as will how the tax came to be underpaid or undeclared, such as through carelessness.
The campaign adds: “HMRC is targeting tax evasion through second incomes and will use information it holds on its digital intelligence systems to identify people who might not have declared all their income.
“This will involve HMRC carrying out checks or enquiries to resolve matters. The customers involved will not then be able to make use of the opportunity offered as part of this campaign.”
The department also reminded second income earners that, regardless of how many years behind they may be with their tax affairs, existing legislation allows its officials to go back up to 20 years in search of undeclared income.
“You may not have to pay any penalty at all but if you do it is likely to be lower than it would be if HMRC finds out you have not paid enough tax,” the department continued.
“Don’t worry if you cannot afford to pay what you owe in one lump sum, if your circumstances warrant it, you will be able to spread your payments.”
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