HMRC issues letters to sweep up your hidden profits!

HMRC have made it clear that they are issuing thousands of standard generic letters to many individuals who they suspect are operating businesses as self-employed individuals, (however small) and under the radar, in what they call the “Hidden Economy”.

The current HMRC purge relates to people selling items on online marketplaces.

HMRC have received information direct from those online platforms, so it is hard information and may be indisputable.

Yes, they may not have perfect information about your name, address, number of items sold, and the amount received from them, but it will be near enough for them to launch an investigation into you.

So, letters are going out in-masse, telling people selling on online marketplace that HMRC already hold information about their income and prompting them to come forward on a voluntary basis and make a disclosure to HMRC, to bring their own tax affairs up to date.

The main other reason is to bring you into HMRC system or clutches, so that you comply and complete tax returns going forward.

If you have never declared profits from trading HMRC can legally go back 20 years from now and they will be sweeping up all understated profits right up to the 5th of April 2023.

So, what should you do if you receive a letter?

You must declare all of your income for any tax year ending the 5th of April, right up to the 5th of April 2023 less any allowable business expenses. This is what they call a voluntary disclosure.

All expenses must be wholly and exclusively laid out for the purposes of the trade and that is a whole subject in itself to explain as to what you can and can’t claim. Many people fall foul of HMRC by over-claiming expenses and some people may not claim enough expenses, so this is where you need an experienced specialist advisor who is worth their weight in gold!

Yes, the disclosure needed is ‘prompted’ by the letter received so you will not obtain the maximum penalty reductions, but by coming forward immediately within the deadline quoted on the letter and telling the truth about your trading history, you will save yourself a lot of stress and money.

However, the forms are not easy, tax and national insurance contributions are far from easy to navigate. Here at Lindsay Henson Ltd we are able to do all of the work for you by liaising with you in a friendly and frank manner, to make those disclosures for you and we will quote you a fixed price for this work, so that you know how much it’s going to cost you from day one. We are fair and reasonable throughout and want to help our clients come clean with HMRC.

Some of you may not have made a profit, some of you may not even be trading at all, but we can talk you through the ‘badges of trade’ to find out whether you come into HMRC’s net, that they are casting wide.

More blogs to follow on this to help you if you get that letter.

Even if you do not have a letter from HMRC but you know you have been selling items on platforms such as eBay, Etsy and Vinted, then you should have a word with us to put your mind at rest. If you have sold for example more than 30 items or if you have bought items for resale or bought goods that you have altered for resale or manufactured in any way or borrowed to fund the business, then you may be trading.

Don’t leave it too late or until you receive that letter. The earlier you come forward the less it will cost you in interest and penalty charges.

Call Andy Rusling on 07879 464577 or Lindsay Henson on 07584 706664 for advice or fixed price for the work needed.