Do you work for someone else? Most people who do will have tax deducted from their wages and paid to the tax office by their employers. However, that may not mean that you have paid the right amount of tax, and if you have underpaid then in many cases the tax office will hold you responsible. The law works on the assumption that you know how much tax you should be paying, and it is your responsibility to tell the tax office if there is anything wrong!
One possible cause of not paying enough tax is that you have a second income and have not told the tax office. Examples of this have been given by the tax office and may include:
- 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
The tax office has recently launched a new campaign to encourage people with a second income that is undeclared to come forward and bring their tax affairs up to date. People who take advantage of this opportunity will still have to pay the tax due on the income as well as interest and some penalties. However, if you do not use this opportunity to make a voluntary disclosure then you will face heavier penalties and possibly prosecution.
Unlike similar campaigns in the past 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 the tax 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.
One thing is certain. If they have introduced this new campaign then it is an area that the tax office is looking at closely. If you think that you may be affected by this then please contact us for further advice.