HM Revenue & Customs (HMRC) is writing to people it believes may have no paid tax on income from the breeding or sale of animals.
Anyone involved in these activities must be more careful than ever to ensure they fulfil their tax obligations.
What is the tax threshold for breeding or selling animals?
If your earnings from breeding or selling animals exceed the £1,000 tax-free trading allowance in any tax year, you must declare this income to HMRC.
Neglecting to do so can result in penalties, particularly if this income influences your overall tax liability.
HMRC’s approach
HMRC is taking a more assertive stance, actively reaching out to individuals suspected of underreporting income from animal breeding and sales.
If you receive one of these letters from HMRC then you must take action.
Taking advantage of voluntary disclosure
If you discover that you’ve failed to report income from previous years, HMRC provides an opportunity for voluntary disclosure.
Once notified, you should promptly inform HMRC of your intention to disclose and complete the necessary steps, including settling any tax owed, within 90 days.
Be mindful that penalties are generally higher for disclosures made after HMRC contacts you, compared to those initiated voluntarily.
If you need guidance through this process, our team is available to help.
Registering for Self Assessment
Should your income from animal sales surpass £1,000 in future tax years, registering for Self Assessment is mandatory.
This process involves submitting an annual tax return that accurately reports all income, including that from animal sales. We can assist with the registration if required.
Dealing with HMRC’s communication
Failing to respond to HMRC’s letters or misreporting your income can lead to significant consequences, such as increased scrutiny of your tax affairs, hefty penalties, or in severe cases, a criminal investigation for suspected tax evasion.
If you’re uncertain about how to handle such correspondence, we can advise you on the appropriate course of action.
Considering the Contractual Disclosure Facility (CDF)
If you believe you may have committed tax fraud, the Contractual Disclosure Facility (CDF) offers a way to admit this while potentially avoiding criminal charges.
We strongly advise you to consult with us before proceeding, to confirm whether fraud has occurred.
The CDF requires you to admit your wrongdoing, detail all related tax losses, and submit a comprehensive report within 60 days.
In return, HMRC agrees not to pursue criminal prosecution for the admitted fraud.
If you require assistance, our team is ready to support you in ensuring compliance. Contact us today.
