Letter From HMRC About Undeclared Income

21/01/2023 - 5 minutes read

Have you received a letter from HMRC about Undeclared Income? If yes, please get in touch with us to discuss your options and how we can help you in reporting your undeclared income to HMRC.

A letter from HMRC about Undeclared Income has been sent out recently in January 2023 to online sellers, influencers and content creators warning them that they have not paid enough tax.

Letter From HMRC about Undeclared Income

The letter From HMRC about Undeclared Income usually states:

“We have information that shows you’ve earned money (income) from creating content on digital platforms”.

Letter from Hmrc about Undeclared Income

Letter from HMRC about Undeclared Income

Online content creators are a specific target so online ‘influencers’ as well as more traditional sellers and casual workers bidding for work online can expect to be contacted.

Gig economy workers and traders selling online are also being sent a detailed letter from HMRC asking them to check that they have reported all their income properly, particularly any earnings in excess of their tax-free personal allowance of £12,570 and suggesting that they make a digital disclosure if they have not complied.

Online sellers have been given 30 days to complete a ‘certificate of tax position’.

The letters are based upon third-party information held by HMRC. In terms of income sources, the online marketplace covers any website that handles and enables the sale of goods or services to a customer. HMRC has confirmed the digital content campaign is not confined to the UK and is being conducted jointly with other tax jurisdictions that are members of the Joint Chiefs of Global Tax Enforcement.

In the letter from HMRC about Undeclared Income, they suggested that if taxpayers have previously undeclared income to disclose they must submit a Notification of Intent to disclose it, using HMRC’s Digital Disclosure Service (DDS) process.

Check your tax affairs are up to date

When you get the nudge letter from HMRC, you’ll need to check your tax affairs are up to date by making sure you’ve declared and paid tax on all your sources of income.

Who can use the Digital Disclosure facility?

The DDS can be used by individuals and companies who have a Disclosure to make about:

  • – Income Tax
  • – Capital Gains Tax
  • – National Insurance contributions
  • – Corporation Tax
  • – Annual Tax for Enveloped Dwellings (ATED)

Examples include a business that has not declared all of its income or a business that’s trading and has not registered with HMRC for one or more taxes.

How to make a disclosure to HMRC

To make a disclosure you should:

  • – tell HMRC that you want to make a disclosure (notify)
  • – tell HMRC about all income, gains, tax and duties you’ve not told them about before (disclose)
  • – make a formal offer
  • – pay what you owe
  • – help HMRC as much as you can if they ask you for more information

If You have undisclosed liabilities & choose not to disclose

HMRC is targeting tax evasion and they’ll use the information they hold to identify customers who have not declared all their income.

If you owe additional taxes, HMRC will usually charge higher penalties than those they charge if you come forward. The penalties could be up to 100% of the unpaid liabilities or up to 200% for offshore-related income.

In serious cases, HMRC may consider starting a criminal investigation, in line with the criminal investigation policy.

How can MCL Accountants help to deal with the Letter From HMRC about Undeclared Income?

Contact MCL Accountants on 01702 593 029 if you want us to help you with responding to the Letter From HMRC about Undeclared Income or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.