People who engage in moonlighting, such as freelancing on top of their normal job, but who keep quiet about their self-employed income are the targets of a new campaign by the taxman.
Although it is similar to HMRC’s previous voluntary disclosure initiatives, in that those who come forward are promised lighter penalties, the Second Incomes Campaign is unique for being without fixed deadlines.
Instead, employees must simply come forward to HM Revenue& Customs to admit that in addition to their regular PAYE job, they are sitting on undeclared income from self-employment, such as from “consulting.”
They must then disclose and pay the tax owed within four months of receiving HMRC’s acknowledgement of their notification, to stand a chance of settling up on “the best possible terms.”
Typically, this means avoiding the usually higher penalties reserved if HMRC approaches the taxpayer, but even the reduced penalties on offer will reflect “the level to which you have helped” officials.
The accuracy of information provided by the taxpayer about their second income will also be taken into account, HMRC says, 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.”
Seeming to address second-income earners hoping to duck such enquiries, the department reminded that, regardless of how many years behind such people may be with their tax affairs, existing legislation allows its officials to go back up to 20 years.
However of the campaign, the department reassured: “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.
“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.”