Tax & admin · 25 August 2017

HMRC card transaction programme offers amnesty to firms with unpaid taxes

Credit cards
HMRC’s amnesty scheme could give small company owners a tax lifeline

Small business owners and self-employed who take card payments may be able to take advantage of a new HMRC amnesty scheme if they’ve made tax oversights in the past.

HMRC has urged small company owners to check their eligibility for its card transaction programme, which will allow those who’ve previously failed to declare income from credit or debit card sales to bring their tax affairs up to date.

Whether company owners simply misunderstood the rules or were deliberately avoiding paying the correct amount in tax, HMRC has encouraged owners to come forward and admit to any inaccuracies, rather than sit back and do nothing.

The government claims that the card transaction programme offers the best possible terms for small firms to get their tax affairs in order.

Under the terms of the card transaction programme, business owners who notify HMRC that they would like to be considered then have 90 days to calculate and pay any self-assessment, VAT, capital gains tax and any other duties or levies they owe.

Participating owners will subsequently be offered reduced penalties, worked out by HMRC on the basis of the extent to which owners have helped to bring their tax affairs in order, and the accuracy of the information they’ve provided.

HMRC has said that reduced penalties may apply even when it’s clear a deliberate decision not to disclose the correct amount of tax owed has been made, and that is likely business owners who can show they’ve made a genuine mistake (as opposed to intentionally avoiding tax) may not be charged at all.

Commenting on the card transaction programme, partner at law firm Newby Castleman, Annalise Lovett said that it was a sign that HMRC understood how difficult it can become relying on multiple payment methods as a small business owner.

She said: “When you first begin accepting payments by a multitude of different methods, from cash to credit card to bank transfer, keeping track of the different income channels can be a challenge without dedicated bookkeeping support.

“Not all businesses will have that support in place. HMRC seems to recognise this and the disclosure campaign is not about attaching any blame, it is simply an opportunity to settle the balance with minimal or no penalties.”

The card transaction programme can be viewed as the first stage of a long-term HMRC plan to come down hard on tax evasion through credit and debit card sales. It has outlined that in future cases where it discovers additional taxes are overdue but businesses haven’t entered the programme, those responsible could face penalties of up to 100 per cent of unpaid liabilities, or up to 200 per cent in cases of income held offshore.

“It could cost a lot more money further down the line if HMRC discover an issue in your accounts relating to card transactions and you have not declared it as part of this campaign,” added Lovett.

“The card transaction programme can also be used by those that are already trading but have failed to register their business with HMRC and declare their income, provided that a part of it came through credit or debit cards.”

Company owners can notify HMRC that they wish to take part in the programme via its digital disclosure service, at which point they’ll be issued with a disclosure reference number, kick starting the 90 days they’ll have available to pay outstanding tax bills.

Lovett went on to say: “For individuals and companies that have recently begun accepting card payments, now would be a good time to go back over your records with a dedicated financial professional, comparing them to the returns filed with HMRC and checking for any discrepancies.”

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Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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