Do you have or have you been accused of having Undeclared Income by HMRC?

Having any undeclared income is a serious issue for HMRC. It means you have broken the law and, in HMRC’s eyes, are guilty of tax evasion. If you have received a letter from HMRC regarding undeclared income or are concerned that you may have failed to report all or some of your income to HMRC, our dedicated HMRC team are on hand to help. However to avoid missing HMRC deadlines to respond to the Undeclared Income Compliance Check or Investigation you will need to take action swiftly.

It is always best to address undeclared income head-on. Our HMRC solicitors and barristers will review your situation and devise a strategy that results in a swift resolution and secures the minimum penalty available in the circumstances.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

What is Undeclared Income?

If you are employed, your employer is responsible for paying your taxes, so you do not need to declare your income unless you have other sources of income in addition to those from your employer. In most other cases, it is your responsibility to inform HMRC of your income and pay any tax owed.

Sometimes, taxpayers are simply unaware of their obligation to inform HMRC about their income. Generally speaking, any income over £1,000 must be declared. This includes income derived from activities such as the following:

  • Selling second-hand items online or in person, such as at car boot sales.
  • Renting out your property, for example through Airbnb.
  • Selling property or shares.
  • Creating content online, such as through being a so-called social media ‘influencer’.

How does HMRC identify undeclared income?

HMRC has a variety of methods at their disposal through which to check whether taxpayers are declaring all their income. The most sophisticated is an incredibly powerful data tool known as ‘Connect’.

Connect can gather and collate information from a massive variety of sources, including the following:

  • Bank records from accounts held in the UK and abroad.
  • Credit and debit card transactions.
  • Land Registry records.
  • Online activity on selling sites such as eBay/Facebook/AirBnB/Vinted and many others.
  • Social media.
  • Tax records.

With the introduction of ‘Connect’ HMRC are now able to electronically identify tax liability risk gaps and focus resource on where the system has identified something that isn’t ‘quite right’. Previously this was more of a manual exercise. We are frequently contacted by people who have received a Compliance Check HMRC letter who may not have historically realised they needed to declared income from other sources.

What are the potential consequences of undeclared income?

Undeclared income is tax evasion. Tax evasion is punishable by significant fines and even imprisonment. However, HMRC is usually more concerned with recouping the last tax than pursuing criminal prosecutions, save in the most severe cases, such as those involving lost tax in excess of £50,000 or organised criminal gangs.

HMRC will often settle undeclared income matters on the basis of the taxpayer agreeing to pay the unpaid tax, interest, and, sometimes, a financial penalty. The level of penalty charged depends on the severity of the tax evasion, but it can be up to 100% of the tax owed. HMRC will prepare a calculation setting out the tax they say is due along with the penalty they propose applying. It’s a good idea to speak to us before accepting the offer, especially if you disagree with how HMRC have arrived at their end figures.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

What should you do about undeclared income?

If you have not been contacted by HMRC about undeclared income but are aware or concerned that you have not declared all the income you should have, the best course of action is usually to approach HMRC and voluntarily disclose your failings. If you take the initiative, you will likely be in a better position than if HMRC contact you about the issue, and less likely to face a criminal prosecution.

If you have received a letter from HMRC regarding suspected undeclared income, you must not ignore it. Engaging with HMRC and proactively seeking to resolve the issue may encourage HMRC to consider a financial settlement.

If you are concerned about undeclared income, speak to us straight away. We will advise you on the best way to notify HMRC about the situation and guide you through the process, liaising with HMRC on your behalf. Our intricate knowledge of HMRC and its processes enables us to negotiate excellent settlements for our clients so you can put the matter behind you and concentrate on moving your business forward. Of course, once you are on HMRC’s radar, you may be subjected to higher levels of scrutiny in the future. Our HMRC solicitors and barristers will work with you to ensure your tax affairs are in order and assist you in putting appropriate systems and checks in place to ensure you adhere to your tax obligations and avoid further investigations. We pride ourselves on providing clear, straightforward legal advice and outstanding client care. We understand that legal costs can be a cause for concern for many clients, and we always keep our fees to a minimum and proportionate to the issues in question.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.