HMRC Credit Card Sales Campaign

As you may recall, our article published back in May of this year included details of the Second Incomes Campaign which H M Revenue and Customs (HMRC) had recently launched at that time.  As part of their continuing drive to encourage those tax payers who have not made full disclosure to come forward, HMRC have recently launched their latest campaign targeted at credit card sales.

As you might have guessed, the campaign is aimed at businesses that accept debit and credit card payments, the income from which should of course be disclosed to HMRC and the campaign is open to all types of businesses, whether they be sole traders, partnerships or limited companies.

It might seem surprising to you that HMRC even need to launch such a campaign since one would imagine it is fairly obvious that credit and debit card sales should be disclosed to HMRC, along with any sales taken by any other means.  They must however think it is a worthwhile campaign to launch and one would assume that they have sufficient data that indicates this an area in which there is a substantial loss of revenue to the Exchequer.  Indeed HMRC state in their guidance on this campaign that they have access to details of all credit and debit card payments made to UK businesses so it may well be that they are planning to utilise such data in the near future to enquire into such businesses’ tax affairs.

Any business which knows that they have not made a full disclosure of their credit and debit card takings would be well advised to make use of this campaign as if they do not and HMRC later launch an enquiry into their affairs then there would almost certainly be higher penalties or even prosecution for the failure to disclose such income.

Unlike some other HMRC campaigns, the Credit Card Sales Campaign does not have a closing date as yet and as a first step the tax payer has to notify HMRC of their intention to use the disclosure campaign by filling in the appropriate notification form or calling the Credit Card Sales Campaign helpline – details of which can be found at www.gov.uk/creditcardsales.

After the notification form has been submitted to HMRC, they will issue a unique disclosure reference number to the tax payer and the tax payer will then have four months to calculate the underpaid tax and pay this over to HMRC, together with any applicable penalties and interest.  HMRC may also offer a staged payment plan if tax payers have genuine difficulty in paying the arrears.

It is initially up to the tax payer to decide how many years they should go back if the under-declared income covers several previous tax years but in the most extreme cases, HMRC could insist that tax payers go back twenty years if they can show that the loss of tax was brought about by deliberate actions taken by the tax payer.  How far HMRC can go back will be determined under the “behavioural” tests that they impose which range from the reason for the non-disclosure being an error made despite taking reasonable care, through to a careless error up to deliberately not making full disclosure to HMRC. 

If you think you may want to make use of this campaign or either of HMRC’s other current campaigns (the Second Incomes Campaign and the Let Property Campaign) then please do not hesitate to contact us for assistance.

The above is for general guidance only and no action should be taken without obtaining specific advice