Undeclared Income – It’s On The Cards!
Did you know that HMRC can track your income by obtaining information about the use of credit and debit cards?
Any individual or business accepting credit or debit card payments for goods or services must be registered with HMRC, who have the power to gather information from the card processing companies. Although no data is disclosed regarding the actual cards or cardholders, the details they receive are used to monitor the value of sales for any business using them . This can then be compared to the income declared on tax returns.
In order to target undisclosed income obtained in this way, HMRC have been operating a Voluntary Credit Card Disclosure Scheme whereby anyone who has undeclared card income can come forward. Although there are penalties, they are likely to be in the region of 10-20%, rather than the full 100% which would be levied if HMRC makes the first contact.
If you have undeclared card income, now is a good time to take advantage of the scheme while it is operating. The first step is to contact HMRC and tell them you wish to take part, following which you have 4 months from the date of acknowledgement to make a full disclosure of all undeclared income or gains. HMRC will expect you co-operate fully with any enquiries they make, as well as remitting all underpaid tax within the time frame, to be considered for the lesser penalties.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.