What Are The Tax Implications Of Doing Private Work In Addition To Your Job?Written on October 25, 2016 by Kirk Rice LLP
The Question:
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?
Kirk Rice LLP answers:
The HMRC is currently running a campaign to catch employees who receive a second income but do not declare the extra income on their tax returns. The type of second income could range from consultancy fees, private tuition, organising parties and events, hairdressing, fitness training, making and selling craft items or buying and selling goods, e.g. at market stalls, indeed anything where you are paid for your services or sell goods at a profit.
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 offer better settlement terms, if you make such a voluntary disclosure. However, those who do not disclose any tax omissions before the campaign ends will be at risk of much higher penalties, potentially 100% of the tax underpaid. 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 ‘second income campaign’ and is a unique time limited opportunity for those affected to tell HMRC about any unreported income and pay what is owed. Those affected will need to tell HMRC 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 HMRC works, 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 receive 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 within four months of receiving 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 in our Ascot office on 01344 875000 or Hadley Baldock in our Putney office on 020 8789 8588 or alternatively email info@kirkrice.co.uk
If you would like to receive Taxing Times electronically, simply email info@kirkrice.co.uk stating Taxing Times Newsletter in the subject heading and we will add you to our distribution list.
Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made.
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