Taxing Times Nov 11

I am a teacher in a primary school but I also offer private tutoring to supplement my income. I have heard that HMRC are targeting people like me for more tax, what is this all about?

Answer:

HMRC have launched another campaign to catch tax evaders who offer private tuition but do not declare the extra income on their tax returns. The type of tuition could range from fitness, dance and lifestyle coaches through to teachers providing extra lessons for pupils.

This is the latest in a series of campaigns by HMRC to give an opportunity for people to come forward and declare unpaid tax. The campaigns generally do not offer significantly better settlement terms than if you disclose voluntarily. However, those who do not disclose any tax errors before the campaign ends will be at risk of much higher penalties. Given HMRC’s use of more sophisticated software and information powers defaulters are also more likely to be caught.

The campaign is known as the ‘Tax Catch Up Plan’ and is a unique time limited opportunity for those affected to tell HMRC between now and 31 March 2012 about any unreported income and pay what is owed. Those affected will need to tell HMRC by 6 January 2012 that they intend to make a disclosure.  If you do think you need to disclose tax errors to HMRC, the way you make your disclosure can affect how quickly matters can be resolved and the level of tax and penalties you pay. Accountants know how tax inspectors work, and it would be advisable to ask an accountant for help as they will use their knowledge to resolve matters quickly, achieving the best outcome for you.

Once HMRC received your notification they will send you a letter to confirm your unique Disclosure Reference Number (DRN).

The next step will be to calculate the tax and penalty due and complete the disclosure form. The form and payment must be received by HMRC no later than 31 March 2012 although it can be sent at any time once you have received your DRN and payment reference number.

Of course if you have been declaring and paying tax on your tutoring income then you will not need to concern yourself with this campaign.

Any reader interested in discussing this topic further can telephone Graham Jennings on 01344 875000 or email graham.jennings@kirkrice.co.uk

Answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made.